Money 20/20 is the world’s largest fintech event, attracting industry experts and entrepreneurs alike to discuss the latest trends shaping the financial services industry. This year artificial intelligence (AI) was a major theme throughout the first day of the conference.
The potential of the technology is significant. As cost savings and increasingly stringent regulatory requirements dominate financial services firms’ agendas, AI promises an answer to both. However, its use cases are far more wide-ranging, and two major areas dominated today’s Money 20/20 discussion: personalisation and customer centricity, and fraud and cybersecurity.
Personalisation and customer centricity
AI is shaping a new era of personalisation, giving rise to new services and new functionality for customers. The concept of personal financial management (PFM), which has struggled to take off, is being replaced by ‘personal financial coaching’ or even ‘life coaching,’ given the intertwined nature of one’s personal and financial affairs.
The industry is moving from addressing customers’ needs retrospectively to anticipating them using AI. Instead of analysing and informing customers about their current financial state, providers are moving towards providing automated recommendations.
Think: “Steve, you exceeded your average spend last month. You should save an additional $200 this month.” Banks able to leverage AI to provide a truly personalised banking experience and tailored recommendations will benefit from goodwill and trust.
However, 41% of banking providers globally do not offer their clients personalised recommendations on how to manage their finances more efficiently as part of their PFM tools.
Yet GlobalData’s 2018 Retail Banking Insight Survey found that 61% of customers would find this useful. There continues to be a clear gap in the market that banks need to address.
Fraud and biometrics
The trade-off between convenience and security is getting tougher. As the push to implement stronger authentication procedures rises, customers continue to expect a frictionless but secure banking experience.
Our data shows that 72% of consumers globally are “very” or “quite” concerned about identity theft. Yet, when asked what is more important to them when conducting a banking transaction – security or convenience – 72% of the Money 20/20 audience voted for the latter. The two impulses have always been in tension, often in the head of the same user.
AI – in tandem with biometrics – addresses this security/convenience conundrum. Biometrics are moving beyond mere fingerprints towards multi-factor applications, such as a combination of face, voice, and behavioural biometrics, all of which can be analysed by a specialist AI tool to offer additional security without adding unnecessary inconvenience. The latter will attract particular attention as the focus in fraud risk continues to rise, simply capturing unique, measurable identifying patterns in human activities without requiring any onerous effort by users.
Banks need to focus on the concrete improvements that AI can offer to their business today. Improving security without compromising convenience, and personalising financial recommendations, will give rise to new and better sales opportunities. It might not be as sexy as an all-singing, all-dancing AI assistant, but these specialist AIs bring real improvements to banks’ current problems.
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