Luis Huerta, Vice President and Intelligent Automation Practice Head, Europe for Firstsource
Artificial Intelligence (AI) will continue to play an increasingly critical role in financial services as we go into 2021 and beyond, thanks to its potential to streamline operations, reduce costs, improve business outcomes and increase competitive advantage. Recognising these benefits, finance companies are capitalising on the technology as evidenced by the fact that AI-related technologies adoption grew during the pandemic while other tech initiatives stalled or were cancelled.
However, the full benefits of AI will only be realised if businesses effectively manage the human side of the digital transformation process. Which is tough. In fact, 81 percent of senior executives in the financial services rate change initiatives as incredibly stressful. And, more than a third (35%) find transformation projects as or more stressful than the COVID-19 lockdown itself, according to recent Firstsource research. Therefore, to realise the benefits of AI while mitigating stress and keeping teams running effectively implementation needs to be managed very carefully.
The power of AI
AI investments can be game-changing in accelerating processes for financial services companies. Loan application for the new, government-backed loans to support companies impacted by COVID-19 provides a prime example of where AI can deliver value. The high volume of applications has put unprecedented demand on financial institutions. Manually processing these, in a time-effective manner is unfeasible. AI driven automation is one way to overcome this challenge by processing and delivering customer service at scale based on data insights.
AI solutions can also help avert financial crime. Supervised learning algorithms can identify data patterns and flag suspicious behaviours, enabling proactive investigation. Alongside preventing fraud itself, this decreases the possibility of disruptive investigations and fines if a fraud case occurs. Furthermore, the volume of suspicious transactions that can be identified and investigated is not dependent on the number of staff available anymore, enabling organisations to scale and increase coverage.
Finally, by applying AI to existing data lakes, lenders can design customised contact and collection strategies, tailored to the needs of each borrower. For example, by analysing and identifying the channel and time that is most likely to result in customer engagement. This will not only ensure that issues are resolved effectively but help build positive customer relationships. This is a particularly crucial consideration during the pandemic as both businesses and customers are under greater strain.
Managing the human impacts of AI implementation
It is clear that AI can deliver significant operational advantages for financial services businesses. However, the implementation of this technology can be challenging.
Business leaders rate managing the emotional rollercoaster as the most difficult challenge during change projects, such as the roll out of AI initiatives. With 70 percent of financial services leaders saying they found digital transformation difficult or very difficult to navigate. As one Chief Financial Officer explained: “You can become over-focused on a programme. You actually live and breathe the whole thing yourself. When it’s going badly, you’re going badly, and when it’s going well, you’re going well. You take on the personality of the stage of the programme you’re in. And that makes it very, very tough.”
To manage these challenges, business leaders advise that their colleagues look out for micro-management. They should also try to spot whether teams are pushing themselves too hard without setting aside time to celebrate wins. Business leaders also extol the benefits of developing a supportive, collaborative culture; which avoids blame placing when things aren’t going to plan and sees mistakes as learning opportunities. A Chief Digital Officer outlined the importance of this: “It’s about trying to say to people; ‘It’s OK to be wrong. No one is perfect. In fact, everybody is almost completely imperfect, and it’s about how we deal with that.”
Those leading the AI charge should also remember that the outcomes from their transformation project won’t be binary. Therefore, it is necessary to manage stakeholder expectations to prevent disappointment. For example, educating colleagues on the fact that AI models will evolve and mature as time goes on and with increasing amounts of data inputted. Raising awareness of AI performance over time is essential for ensuring projects don’t over promise and under-deliver. To this end, it is key that AI is only implemented in response to specific business needs. Introduction of the technology should not be treated as an outcome itself.
The best of both worlds
When aligned with business goals, AI’s transformative capabilities will help ensure financial services companies thrive in 2021. However, the people-focused challenges of any digital transformation projects cannot be ignored. This can be managed by recognising that projects will have highs and lows, and proactively planning for how the team will pull through them together. In doing so, financial services will reap the benefits of AI while managing the pressure on colleagues.
