Artificial Intelligence looks set to step up its game to disrupt financial services

Written by Giorgio Milki || 11 Oct 2017

The Financial services sector is integrating AI (artificial intelligence), machine learning and predictive analytics at a remarkable rate for both customer-facing and back-end operations. One element commonly associated with AI, but one that has not yet made a strong impact, are ‘chatbots,’ computer programs designed to simulate conversation with human users. However, this could be about to change, with large financial institutions starting to experiment and launch products leveraging AI technology.

One of the leading banks in the space is HDFC Bank, one of India’s largest private sector banks, which launched its own chatbot created in partnership with Niki.ai, for Facebook Messenger. OnChat, the bank’s maiden venture into automated conversational banking, allows customers to transact for bill payments, mobile recharges and booking travel.

The bank’s chatbot release in December 2016 was met with an impressive 160% month-on-month growth in transactions while garnering over 2.4 million messages leading up to March 2017. The bot is able to personalize communications to customers, such as payment reminders, and is smart enough to decipher a mix of Hindi and English – just the way a lot of Hindi-speaking Indians prefer to communicate in real life. Interestingly, OneChat has seemingly become an additional way for HDFC to acquire new customers, with over 25% of the Chabot’s users being non-customers that simply have a Facebook Messenger account.

Following that success, in March 2017, HDFC launched another chatbot named ‘Eva’, built by Senseforth AI Research, on the bank’s own website. Since its release, ‘Eva’ has interacted with over 530,000 unique users, holding 1.2 million conversations and addressing 2.7 million queries with an accuracy level of over 85%.

Despite this encouraging example, the public still appear unconvinced. A study conducted by Forrester consulting in October 2016 reported that over 79% of Indian consumers (83% worldwide) would rather interact with human beings, as they find the chatbots to be lacking in emotional perceptiveness or simply aren’t smart enough.

Reacting to current public opinion, AI developers see this negativity as just a temporary phase. Amdocs, an AI capabilities firm and recent partner of Microsoft, mentioned in a September 2017 article on Forbes that as the technology improves, so will public perception. With current advances in AI technology, the firm believes that in 5 years, 85% of customer interactions will be carried out by software robots.

A further study by Juniper Research, released in May 2017, predicts that chatbots will save companies $20m in 2017 and the figure could grow significantly to $8bn in 2022. This seemingly ambitious statement is backed up by a March 2017 Accenture report which found that over 76% of banking executives intend to deploy AI within the next three years, to improve their customer interactions.

The capabilities of AI reach much further than chatbots however. AI powered technologies have also drastically improved the back-end processes of major Financial institutions. JP Morgan Chase invested heavily in AI to assist in document analysis and were able to reduce the 360,000 hours needed per year to review credit documents, to a matter of mere seconds.

In addition to this, AI is looking like a promising tool for providing Robo-Advisory software to offer financial advice to clients and improving bank security through fraud detection capabilities with ‘adaptable’ software.

Chinese firm Baidu, recognised the potential in AI and acquired Qi Lu from Microsoft, where he was a top figure in the company’s AI strategy. Baidu believes it is at the forefront of AI technology as they offer a more diverse platform of over 60 AI services, which it calls it’s ‘Baidu Brain'. The move will offer some relief to Baidu, after losing one of the world’s leading experts in AI, Andrew Ng. Despite his departure, Ng believes that “AI is the new electricity and will transform industry after industry, and Baidu is well positioned to transform several industries” according to a blog post featured in a March 2017 MIT Technology review.

The evidence overwhelmingly points toward a bright future for AI and subsequently promising opportunities for the Financial Services industry as a whole.

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