AI is changing the rules of the game for financial services companies, and developing and implementing a strategy is not optional–it is a must for any company to survive and thrive.
The modern banking system has endured more than its share of change since its emergence during the Renaissance in Europe. The world map has been redrawn many times, and society has transformed through agricultural, industrial and technological revolutions–and the banking system has evolved with it to become an indispensable pillar of modern society.
Now, the emergence of AI signals another major change. Banks and other organisations operating in the financial services sector must move quickly to start developing and executing coherent plans to utilise AI technologies. I say ‘technologies’ because AI has many forms, including generative AI, machine learning, natural language processing, robotic process automation, predictive analysis and sentiment analysis, to mention just a few. This can be daunting for banks, as it brings complexity and confusion. Many organisations will struggle to define AI, making it difficult to develop a strategy for its best implementation and use.
In this context, financial services organisations need to take stock and assess who they are, what they stand for, and where their value proposition lies. They need to recognise that AI is transformative and that no matter how many types of AI they want to implement, it is very different from implementing a single technology solution such as a new CRM platform. AI is transformational on another scale, and therefore, organisations must take a more comprehensive approach and transform around it, which means considering its impact across the board, including the implications for strategy, marketing, operations, customer service, HR and all other aspects of the business.
While banks should certainly not delay plans to embrace AI, they must approach it with caution to get it right from the outset, given the many aspects to consider. This means up-skilling and gaining a sound understanding of what AI, in all its forms, can enable a company to achieve. It also means assessing the potential pitfalls, such as AI algorithms introducing bias and risk, because, like everything, AI can be misused and introduce errors if not used properly.
Role of regulators
The situation is more complex because regulators globally are still playing catch-up with AI. The rapid pace of AI development and the highly regulated nature of the financial services sector make the situation even more tricky for governments. As and when regulations are implemented, they will need to be modified frequently. It is, therefore, vital that banks educate themselves about global and local regulation trends to either comply with new regulations or be better positioned to comply with upcoming rules.
Even banks not yet actively deploying AI solutions must be mindful of AI regulation. They may be inadvertently using AI systems that are part of third-party solutions, such as CRM software or cybersecurity solutions. Thus, they need to be aware of this and any risks and issues around regulatory compliance.
To develop an AI strategy, banks should define what they stand for and decide on their objectives and limitations. They should simultaneously consider the broader implications and ethical ramifications of what they want to do–whether deploying a chatbot to handle customer calls or launching a personalisation engine to recommend products and services to customers. Banks should be conscious that AI can cause actual harm to customers, and so any AI implementation must be carefully managed and monitored from its inception. Business leaders must recognise that AI requires a big upscaling exercise in knowledge and management to ensure it is properly leveraged and can achieve its goals.
Despite AI’s game-changing nature, organisations do not necessarily need to leap into AI with a large, expensive technology overhaul. They can start by working with what they already have—for example, they can leverage their current data to gain insights and make incremental, tangible improvements.
AI is a journey, not an end, and any implementations should be considered part of a continuous transformation. As part of this journey, it is imperative to continually measure the impact of AI initiatives and share successes across the organisation because nothing unites people more than victories, and employees need to see the benefits of AI to realise that it is critical to their organisation’s success.
AI is coming, whether companies like it or not. The sense of urgency may sound alarming, but when you see a 20-meter wave coming, you cannot swim against it; you must ride the wave to a successful outcome. To do so, all players must take stock of where they are and where they want to go and plan to deploy AI as part of a comprehensive transformation journey tailored to their organisation’s specific needs, customers, and key stakeholders.
