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CONVERSATIONAL AI: WHAT IS IT AND HOW CAN IT DRIVE GROWTH IN THE FINANCIAL SERVICES SECTOR?

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Charles Sutton, Financial Services and FinTech Lead EMEA, NVIDIA

 

Over the last seven years, there has been a significant shift towards digital engagement. Its growth shows no signs of slowing, with consumers becoming more accustomed to using digital channels for all aspects of life. They’re using mobile banking apps, artificial intelligence (AI) infused virtual assistants to get real-time security alerts, and they’re even moving money between accounts using just their voice.

And in many cases, consumers are interacting with AI without even realizing it. From waking a home voice assistant with a simple “Hey” to using speech-to-text functions for hands-free typing, both are built using Conversational AI.

 

What is Conversational AI?

Conversational AI is the application of machine learning to allow humans to interact naturally with devices, machines, and computers by simply speaking to them. As a person speaks, the device works to understand and find the best answer, providing a response with its own natural-sounding speech.

It may sound simple, but the technology behind conversational AI is complex. It involves a multi-step process that requires a massive amount of computing power. Delivering a seamless user experience requires several complex models that need to run in less than 300 milliseconds.

Charles Sutton

Conversational AI is primarily based on three key processes:

  • Automatic Speech Recognition (ASR), which takes spoken words and converts them into readable text.
  • Natural Language Processing (NLP), which reads written text, understands the context and intent and then generates an intelligent text response.
  • Text-to-Speech (TTS), which converts the NLP text response to natural-sounding speech, with human-like intonation and clearly articulated words.

 

Transforming the Customer Experience with Conversational AI

The Financial Services Industry is under pressure, with rising levels of risk, higher volumes of customer service enquiries, and the need to develop digital channels to balance the closing of branches, especially in a post-COVID-19 environment. Just a one-point decline in a business’ customer experience score can equal $124 million in lost revenue for multi-channel banks.

Conversational AI can significantly improve the customer service experience throughout the customer journey. AI can enable customer service agents to deliver an improved customer experience, providing them with real-time insights to reduce their workload and deliver a speedier interaction for customers. It can generate personalized, recommended offers and next-best actions for each customer based on their individual data. It can even transcribe calls and take notes for the agent, reducing their post-call reporting time and allowing the agent to quickly and accurately support more customers.

With growing volumes of customer calls, a virtual AI assistant can be available day and night to assist with simple enquiries such as account-related questions or product applications. Customers can have conversational, human-like dialogue with intelligent, instantaneous responses, customized for the user it’s talking to. AI virtual assistants can also support customers with disabilities who might not be able to interact with the keyboard or screen.

UK-based NatWest’s digital assistant, Cora, is handling 58% more inquiries year on year, completing 40% of those interactions without human intervention. According to Juniper Research, 90% of customer interactions will be automated by 2022, saving banks $7 billion by 2023.

Agents should be focused on delivering the best customer experience, which means that fraud can go undetected at the call center. In fact, there’s a reported 80% of fraud going undetected today. As a call takes place, conversational AI can spot fraudulent activity like identity theft by using sentiment and confidence analysis, pattern recognition and voice-based identity authorization.

 

Conversational AI for Document Extraction and Risk Monitoring

Financial applications/market monitoring pulls unstructured data from many sources such as the news, customer applications, events, documents, proprietary data, market moves or filings. To collate such a large amount of varied data, businesses can use NLP to extract data from documents, regardless of language or layout. It can perform text analytics, entity and event extraction, and relevance and sentiment analysis to extract the most important information for decision making.

This type of AI document analysis can detect early warning signs of risk, like defaults, bankruptcies, lawsuits, or fraud. It can also improve lending decisions, be used for investment risk management and accelerate due diligence for Anti-Money Laundering (AML) and Know Your Customer (KYC) compliance.

By making this monitoring automatic, risk mitigation can minimize costs, and businesses can target investment opportunities with alpha returns and can gain operational efficiencies by customizing NLP for specific use cases. Banks and insurers can also use document processing to process all types of applications across unstructured document types, speeding up document turnaround time, reducing error rates and significantly improving document processing costs.

 

Accelerating Business Performance with Conversational AI

While AI continues to become more mainstream, there’s a shift towards e-commerce and a digital-first customer experience, where people are using AI in their day-to-day activities — in fact 46 percent of people are using it every single day.

Throughout the customer experience, conversational AI can deliver a smoother, faster experience, it can be on-hand to help all day, every day, enable agents to do their best work and reduce fraud — all at the same time.

 

Technology

How Digital Adoption Platforms can enhance digital transformation and customer experience in the insurance industry

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By Vara Kumar, CPTO & Co-founder, Whatfix

 

Like many industries, the insurance sector was prematurely hastened towards digitalisation due to the Covid-19 pandemic. Now, digital adoption continues to be a key focus of many organisations to strengthen their fully or partially remote workforce with nearly 50% of IT spend being put behind the growth of core applications and infrastructure, and an additional 25% being invested into digital solutions.

But with millions of claims processed every year, needing to provide superior customer service to drive retention, complex procedures and processes to navigate and both internal rules and external regulations to follow, digital transformation plans for insurance organisations are filled with challenges.

Increasingly digitalised workforce

With the pandemic came an overhaul of how we work. Remote and hybrid working is now the norm, and across most industries, there’s been a huge expansion in both the number and type of digital applications used to communicate, collaborate and enhance productivity across an organisation.

For the insurance industry, this has meant that every employee, from underwriters to customer service agents, has had to adapt to handling their steps of the process, from setting up coverage to filing a claim, remotely, and across multiple platforms and tools.

The challenge is ensuring this more digitalised workforce fully understands how to successfully navigate each application effectively and efficiently to ensure they can deliver on their services and customer experience (CX). But putting together a skilled, high-performing IT team can be difficult – according to an enterprise study, 54% of organisations said they’re not able to accomplish their digital transformation goals because of a lack of technically-skilled employees. This is further complicated by the fact that, in an age of labour shortages, the sector is forced to get creative and find ways of managing the workload and navigating new technologies with a smaller workforce.

Changing customer expectations

On top of the challenges that the increasingly digitalised workforce is experiencing, the tech-savvy customer of today also expects more from their insurers. Indeed, the pandemic forced customers as well as organisations to become more IT-literate, and in the customer service space in particular, customer expectations are high.

Customers today want and expect to be able to make maturity or house insurance claims in an efficient and straightforward manner, across multiple platforms, from phone to email to social media, preferably in a matter of minutes.

McKinsey observes that improving the value chain from the customer’s point of view is an important step within digital-ecosystem efforts, and HubSpot found that 90% of consumers expect an immediate response to a customer support issue, with 60% defining ‘immediate’ as under ten minutes. Even pre-pandemic 44% of customers were comfortable utilising chatbots for insurance claims, and 43% were comfortable using them when buying insurance policies.

Undergoing a digital transformation on the customer side is crucial then, as insurance providers that can meet these changing customer expectations are more likely to attract and retain customer loyalty now and in the future. However, just 30% of insurers believe that they have the capabilities to fully digitalise their customer experience.

So, what can insurers do to meet the technological demands of a digitalised workforce and a multi-channel CX for tech-savvy customers?

Using DAPs to boost digital transformations and CX

In a rapidly changing market, Digital Adoption Platforms (DAPs) can be a huge advantage to insurers looking to manage the challenges of today and come out on top. A piece of instructional no-code software that sits as an additional layer on top of other software applications, such as Claims Management or Policy Administration Systems, to help train and guide users on how to best use the software, DAPs can massively improve the agility and effectiveness of business processes across an organisation.

On the employee side, for example, DAPs can help insurers to manage challenges of a frequently changing workforce by making it easier for employees to get to grips with new digital applications. With the likes of  guided walk-throughs and task lists, which help employees through each step they need to know and just-in-time nudges to reduce policy administration, claim, or underwriting processing times, employees are more efficient and technology adoption is streamlined and accelerated. Easy to integrate into existing systems, DAPs can be used to not only train and onboard new employees but also upskill veteran workers, training the workforce as a whole on the latest technologies being used across the industry. As a result, everyone from underwriters, claims, and service representatives will better understand insurance tools that will enable them to be more productive and better deliver customer experiences leading to better business outcomes. Indeed, from the customer perspective, DAPs can enable companies in the insurance industry to keep CX positive and smooth. Firstly, by training on near real-life scenarios and secondly, by being able to more easily navigate applications, processes and systems internally, customer service representatives will be able to spend more time and focus on the customer and on resolving their queries, without being hindered by technological hurdles. For example, errors made in policy or claims processing can be reduced if employees can use self-help elements of DAPs to mitigate issues and solve queries themselves, in real-time. As a result, customers will be happier with their service, and more likely to stay loyal to that brand.

Customer-facing platforms can also be improved using DAPs. Typically, legacy apps whether on our phones or online, can make it difficult for users to complete their tasks, leaving them frustrated. With DAP user-specific content and just-in-time support, such as pop-ups, automated walk-throughs and user guides for every part of the user journey, customers can experience a smoother journey and have their queries and issues resolved more efficiently..

Drive efficiency and customer satisfaction

DAPs are already growing in popularity, with Gartner predicting that by 2025, “70% of organizations will use digital adoption solutions across the entire technology stack to overcome still insufficient application user experiences.”

So, now is the time for insurance providers to leverage this technology to facilitate their digital transformation plans. By ensuring their increasingly dispersed and digitalised workforce can use the latest applications to their full potential, and that their customer journey is as efficient and easy-to-use across the multiple channels customers expect, insurers will see huge benefits, from increased efficiencies to improved customer satisfaction.

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Are cyber insurance and incident response budgets the same thing?

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Dominic Trott, head of strategy – UK, Orange Cyberdefense

 

Cyberattacks on businesses increased by 13% in 2021 compared to the previous year. Yet while it’s not necessarily the case that the number of bad actors is increasing, it is the scale on which they’re operating that has broadened exponentially.

In addition, the manner in which cyberattacks are being carried out has also evolved. While some cybercriminals hack for fun, the vast majority of malicious activity is, unsurprisingly, conducted for financial gain and targets organisations on the basis of two simple principles: first, where there is the most value to be targeted; and second, where the attacks are most likely to be successful.

It’s also likely that the full extent of the cybercrime landscape is hidden. Accurate data on the impact of cyberattacks is often hard to come by because, in many cases, the breached organisations are unaware of the full extent of the attack – or even that one took place. They might genuinely not know this information if they don’t have accurate oversight of their digital estate, or keep quiet for fear of incurring legal liabilities or causing reputational damage.

The current security landscape has created the perfect storm for cybercriminals, as cyber insurers and Computer Security Incident Response Teams (CSIRT) often end up fighting over the same budget. Traditionally, it has been relatively easy for firms to obtain cyber insurance coverage at low premiums. However, the heightened cyber risks and exponential growth of ransomware attacks in recent years has led to premiums rising.

The question that businesses often ask, therefore, is ‘why do I need an incident response retainer when I already have cyber insurance? Surely, it’s a waste of money? If the worst does happen, the insurance company will pick up the bill for any damage done after the event’. I would argue that is a short sighted and potentially dangerous approach. Let’s look at the different roles of incident response and cyber insurance.

  1. Cyber Insurance: like other types of insurance, this aims to give businesses a way to ensure that if the worst happens, they can recover some of the costs. Cyber Insurance will likely cover you for some of the tangible costs associated with a breach, but it probably won’t cover all of them. By acting quickly and limiting the scale of the breach, you may be able to reduce the full impact. In addition, some insurance companies will expect you to have demonstrated a level of preparedness before accepting your claim – a bit like having a burglar alarm or dead-bolt locks on your house before a house insurance claim is accepted.
  2. Incident Response Retainer: aims to provide rapid, on-demand expertise in an emergency if the customer calls them immediately after an incident. The key to mitigating the impact of any cybersecurity incident is the reaction time between detection and response. Many companies lack the infrastructure needed to react in a quick and secure manner. Having an incident response team available 24/7 to identify, contain and eradicate threats and to get businesses back up and running as soon as possible may be crucial to their ability to continue successfully trading.

 

Cyber resilience

But isn’t incident response included in the insurance policy? In many cases, it will be. And perhaps this is where the confusion comes. Cyber insurers will often pay out, but only as long as the incident is covered by an incident response retainer. Their objective is of course to help cover the financial losses that result from cyber events and incidents and in numerous policies, the presence of a retainer agreement with an external incident response provider can help prevent severe losses. This will often bring down the premium of the insurance policy. Having a retainer also means you get to choose the CSIRT team that you are going to be working with in advance. You can assess their credentials, their experience, talk to their other customers – all before an incident occurs.

The key thing here is building cyber resilience. Of course, there is no such thing as complete security. For starters, incident response alone is insufficient to deliver cyber resilience from either a technical or procedural perspective. Good practice advocates that solutions should be in place across the full threat lifecycle. For example, the NIST framework recommends that organisations identify their threats and vulnerabilities; protect against them with security tools and operations; detect threats as they address the enterprise; respond to contain and remediate an incident as it occurs; and recover to take lessons learned from incidents and improve ‘business as usual’ appropriately.

But, leaving an end-to-end approach to threat lifecycle management to one side, having both cyber insurance and an incident response retainer working seamlessly together will at least provide organisations with a fighting chance of continuing their core business functions if and when disaster strikes.

 

Making cybersecurity a joint enterprise

There are worrying trends emerging in the cybersecurity market. While attacks are becoming more sophisticated and ransoms are rising, there are concerns that there might not be enough money in the still-emerging sector to cover everyone’s needs. So, what can companies do? They should still invest in insurance coverage, but they also need to look for other ways to cover their potential exposure, including CSIRT rapid response teams.

It cannot remain a budgetary decision for a CTO and a CFO to fight over whether to firefight OR recoup what has been lost in cyber-attacks. Both are important. An incident response team is the first port-of-call to help respond to any cyber accident or incident. Then and only then – once the breaches have been made safe – should you call in the moneymen.

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