Artificial intelligence is at the heart of 21st century life. Indeed, according to Harvard Business Review, we’re currently living in the “age of AI”.
AI has a range of benefits. First, it drastically improves the customer experience, making better use out of the data they provide to offer personalised, tailored recommendations. More importantly, however, it transforms businesses’ operations—allowing them to work quicker, more accurately, and more cost-effectively than ever before.
And it’s clear that AI can have a particularly profound impact on the banking/financial services industry.
As things stand, nearly 60% of players in the financial services sector are embedding at least one AI capability within their organisation. 37% of these companies are actively using AI to reduce operational costs, with 86% of firms looking to further increase their AI-related investments in the next five years.
In fact, according to McKinsey, AI could lead to “$1 trillion of additional value each year” within the banking and financial services industry.
If you want to improve your operations going forward, it’s time to put AI to good use.
The rising importance of AI
AI is making businesses smarter, more efficient, more productive, and more accurate: delivering time- and cost-savings, as well as improving the customer experience.
According to McKinsey: “the AI-first institution will be optimized for operational efficiency through extreme automation of manual tasks (a “zero-ops” mindset) and the replacement or augmentation of human decisions by advanced diagnostic engines in diverse areas of bank operations.”
By implementing AI-based solutions, you can effectively outsource all of your team’s low-value, time-consuming, and data-heavy tasks. We all know about the power of data. However, the process of acquiring, cleaning, processing, and analysing data has typically been slow and error-prone.
With AI, however, you can generate real-time insights into both your customers’ behaviour and your internal performance from auto-generated reports. Not only will AI be significantly more accurate at these types of tasks than humans ever will, but it can work 24/7.
It allows your team to move beyond low-value and time-consuming work (like scanning large numbers of documents). Instead, they can let AI handle the grunt work before putting their decision-making skills and creativity to good use once they have all the relevant information.
What’s more, AI will bring out the best in your team. As James Wilson, managing director of information technology and business research at Accenture Research, states: “AI’s greater potential lies in leveraging the technology to enhance collaboration with humans”.
But what about the fear that AI might replace people’s jobs? Interestingly, this attitude seems to be on the decline—72% of workers now believe that AI (and automation more generally) will help them do their job better, instead of posing a threat to their livelihood.
Companies looking to improve their internal operations simply have to implement AI-based solutions. AI will allow them to execute complex, data-heavy work quicker, easier, and more accurately than ever before.
It’ll shed light on previous customer behaviour before predicting future trends. It’ll lift the lid on your organisation’s current performance, revealing never-before-seen insights that’ll make you more successful going forward.
Head of Operations: the profile
Operations as a core function within an enterprise has come a long way in the past century. However, despite the range of approaches and innovations, the main goal has remained the same throughout all these years: to maximise operational efficiency.
In the early 20th century, the introduction of “scientific management” was a game-changer in improving productivity by outlining organisation-wide best practices, instead of simply leaving workers to try whichever method they thought best.
Assembly lines were then introduced in 1913, allowing manufacturing workers to stand in the same place all day long and have their work delivered straight to them. Concepts like flexible specialisation, lean production, mass customisation, and agile manufacturing have since emerged, but none had quite the impact that AI is having on operations.
These days, a Head of Operations has wide-ranging remit, but their main responsibilities can be distilled down into three primary goals:
- Decreasing costs
- Increasing efficiency
- Increasing the speed of implementation for new strategies and tools
These goals are measured according to financial, marketing, and employee efficiency outcomes. Heads of Operations must deliver increased customer value more efficiently and cost-effectively than ever before, quickly getting to grips with novel strategies and tools that’ll help them do this.
That’s where AI comes in.
The impact of AI on banking operations
McKinsey reports that AI technologies can drastically transform a bank’s ability to increase profits, provide at-scale personalisation, offer distinctive omnichannel experiences, and rapidly innovate.
This all sounds great in theory—but where’s the evidence?
According to EY, robotic process automation (RPA) cuts the costs of data entry by up to 70%. It’s been reported that AI can lead to a 20 – 30% decrease in “false positives” when it comes to investigating financial crime, reducing manual work by up to 50%. Moreover, JP Morgan Chase has notably used an AI-based contract intelligence platform to save the bank more than 360,000 hours of manual labour.
This increased operational efficiency is especially important right now, given the pandemic-induced disruption to business-as-usual. Lloyds Bank has dealt with increased enquiries to their call centres by leveraging AI-based solutions to identify calls from priority customers (e.g. those working in healthcare or over the age of 70), before putting them to the front of the call queue.
What’s more, one unidentified UK-based bank has used AI to reduce the duration of its compliance process by a massive 80%.
AI-based solutions are helping forward-thinking financial institutions transform their operational efficiency. No longer can the competition sit back and observe from a distance. Those that fall behind AI adoption will inevitably end up chasing the competition for years to come.
Worryingly, it appears that Europe is already well behind the US and China in terms of AI adoption. If European banks and financial institutions are going to be serious global contenders in the years to come, this needs to change: fast.
AI is the answer
As banks and financial institutions seek to beat out the competition, improving their customer experience while operating more accurately, efficiently, and cost-effectively than ever before, they have to transform their internal operations.
AI allows companies to make the most out of their data, instantly analysing large data sets in seconds. It reduces instances of human error, handles what was previously incredibly time-consuming, manual work, and allows employees to focus on higher-value activities—leading to increased job satisfaction and performance.
Therefore, it’s crucial that banks and financial institutions leverage AI to transform their operations. As McKinsey states, “Banks that fail to make AI central to their core strategy and operations—what we refer to as becoming “AI-first”—will risk being overtaken by competition and deserted by their customers.”
If you want to safeguard your future, protect your bottom line, and transform your internal operations, then you need to leverage AI-based solutions. It’s as simple as that.
Check out how receeve puts AI capabilities at the core of its collections management software here.
Chan is a marketing manager at receeve who focuses on design, SEO, and performance and content marketing. She is passionate about creating genuine, helpful, and educational content to share with the receeve audience.