Would you want a robot managing your money? Are you
comfortable with a computer that could think and learn?
While this might sound like a futuristic science fiction
novel, it’s already happening in financial services. Robots and smart computers
are helping to manage your money, and they will enable banks to increase
revenue and employment over the next five years, according to a report by
Accenture on realizing the full value of AI .
Artificial intelligence refers to computer systems that are
able to perform tasks that historically required human intelligence, such such
as recognizing images, understanding speech, translating languages and making
decisions. Some examples of artificial intelligence in financial services are
mobile checking deposits that read checks, custom notifications that flag high
payments and specific transfer reminders.
Recently, J.P. Morgan Chase announced that it was rolling
out an AI-powered assistant in the treasury services division that will handle
an average of $5 trillion daily. While the assistant is only for corporate
clients right now, other banks have launched virtual assistants that use AI
technology for retail customers.
A majority of banks and financial services companies are
planning to implement AI technology in their business or already have,
according to a 2017 study by Greenwich Associates, a global market intelligence
and advisory services firm in Stamford, Connecticut. Over half of the 100
executives surveyed were exploring the technology and had plans to implement
within 12 months, and 18 percent had already started using AI technology.
Financial advisors and banking employees say that new
advances in technology are nothing to fear. In fact, most think that it will
help them do their jobs more effectively.
It will “help advisors make better decisions and spend less
time on the boring parts of the job,” said Paul Dravis, partner of Future
Perfect Machine.
AI already in the game
There are many examples where AI technology has already
improved money management. Bank of America and Wells Fargo have virtual
assistants for retail consumers . In addition, there are FinTech start-ups
dedicated to using new technology. FinTech stands for financial technology, and
refers to a new industry that uses innovation to improve traditional financial
services.
These products generally offer a more sophisticated
interface than robo-advisors, which offer portfolio and investment management.
They mimic human-like qualities by being more conversational and easy to engage
with because you can talk or text with them like you would a person.
Kasisto, the company that worked with J.P. Morgan to run
its AI engine, has a retail offering as well. KAI, a conversational AI
platform, is used by companies such as MasterCard and Wells Fargo in virtual
assistants, also known as chatbots.
“What we do is really enable conversations,” said Dror
Oren, the co-founder and chief product officer of Kasisto. “But we are seeing a
wide range of usage of AI in banking across the board, from planning and
advising to fraud detection.”
Aside from conversation, AI shines in personalization and
compiling data. Oren says that you can ask AI specific questions such as “how
much money have I spent in restaurants in 2018?” and it can answer for you
almost instantly. In addition, it can also offer to do things for you, such as
setting up an alert to tell you when your restaurant spending has gone over a
certain amount. For banks, and for anyone looking to manage money, AI is a
useful tool for engagement and education. Oren said that consumers of KAI
include financial advisors who use it to add to their productivity and
accuracy.
Pefin, another FinTech start up, has also noticed that
financial advisors benefit from its AI product as well as consumers without an
advisor.
“We don’t see it as replacing advisors, we definitely
believe that there are always going to be extremely complex situations,” said
Catherine Flax, CEO of Pefin.
Pefin has the ability to do advanced models based on
different variables, such as showing you how moving to a new state would affect
your retirement savings. It takes into account millions of data points over the
life of the user for its calulation.
“All the variables in the decision processes impact future
decisions,” said Flax. “Compound questions that are hard for people to answer
are easy to see in the context of the platform.”
Flax said that while the platform was developed to bring
financial advice to those who could not afford an advisor, it has also helped
those who do have an advisor understand their finances better. Because it
updates daily and lays out information in a clear way, it’s a great tool for
anyone looking to manage their money, said Flax.
AI working with humans, not against them
Banking employees and executives think that AI will change
the future of their work. Nearly two-thirds of banking executives believe that
intelligent technology will completely transform the industry, according to the
Future Workforce Survey by Accenture which surveyed 100 CEOs and executives and
1,300 bank employees.
“It already helps with trading, rebalancing and calculating
risk,” said Jim Shagawat, a certified financial planner with Windfall Wealth in
Paramus, New Jersey. “I think we’re going to see it help with prospecting
clients.”
In addition, over half of executives said that they believe
human-machine collaboration is important to achieve their strategic priorities.
Most advisors are not worried about AI replacing them.
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