Alan Turing was a young British polymath who had the desire to explore the mathematical possibility of artificial intelligence. Turing suggested that humans use information as well as a reason to solve problems and make precise decisions, so why can’t this notion be the same with computers? This was the logical framework of his 1950 paper, Computing Machinery and Intelligence. Here he discussed how to build intelligent machines and how to test their intelligence.
The approach to using AI has differed based on the type of financial firm. Among fintech’s and investment institutions, the most used AI applications were algorithmic trading, as well as portfolio optimisation. This reflects a specific focus on maximising client returns. In contrast, banks and other financial institutions noted fraud detection, recommender systems, and sales and marketing optimisation as their top AI use cases. Consumer banks focus on fraud detection and prevention and build AI-enabled applications for customer acquisition and retention. (1)
Application of AI
A very simple application used today by firms in many different sectors is chatbots. The simple algorithm can be designed in a way to epitomise the works of a customer service assistant whilst making sure the customer’s needs are attended to in the same cohesive manner. The algorithm is set up in a way that reduces the time it takes to pinpoint the query so the problem can be solved seamlessly without any arduous conversations. The main selling points to a customer are ease of service and fast response both of which is what the algorithm in the AI have centred around.
AI is enabling financial institutions to deliver smarter and more secure services to their clients and customers. Take Royal Bank of Canada (RBC). RBC built a private AI cloud for banking to run thousands of simulations, train AI models, and analyse millions of data points in a fraction of the time than it could before. This has helped reduce client calls and resulted in faster delivery of new applications for RBC clients. Due to this progression, RBC expects to redesign the customer’s banking experience with newer and more equipped AI-led applications. (2)
Artificial Intelligence as you knew beforehand is extremely diverse in its use. AI can upgrade financial services and transform the way they are presented to customers, allowing more informed and tailored products, increasing the efficiency of marquee processes, enhancing cybersecurity, and reducing manageable risk.
Through Financial Pills, we are going to delve deeper into how AI is being implemented, how it is radically changing what we know of banking and services as well as the ethical and regulatory challenges it is to face.
– Jobin Reji, Kings College London