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Mind the AI gap: 3 common artificial intelligence pitfalls and how finance firms can avoid them

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Artificial intelligence (AI) promises to bring operational and strategic benefits to finance firms, improving decision-making, combating fraud, increasing efficiency and elevating customer service. Yet, scaling up and unlocking the full potential of any emerging technology can prove difficult. Drawing on lessons learned deploying technology solutions to leading players in the sector, Rob Smith, CTO of award-winning cloud services provider Creative ITC(https://www.creative-itc.com/), explains how finance organisations can avoid common AI minefields to achieve greater ROI.

As organisations progress digital transformation to gain a competitive edge, the inexorable rise of artificial intelligence (AI) and machine learning (ML) in the finance and banking sector shows no sign of slowing. Offering firms new ways to accelerate and improve decision-making and customer service, half of UK banks plan to invest more in these new technologies as a result of the pandemic, and global annual spending on AI by banks and finance firms is predicted to reach $64.03 billion by 2030.

 

Expanding AI practice

The fastest AI adoption rates are being seen in middle office areas such as risk management, payment fraud and debt analysis, delivering efficiencies and financial savings. Credit evaluation processes are being automated, speeding up applications and improving loan decisions. AI and ML solutions are also helping organisations to minimise fraudulent financial transactions, flagging suspicious patterns to expedite necessary interventions. There’s also been success in optimising payment collections with AI, reducing payment delinquency rates.

AI is increasingly supporting human decision-making in investment banking, too. Identifying performance changes to enable better-timed trades, the technology is being used by asset and hedge fund managers to pick stocks and bonds.

As AI grows in maturity, institutions are building on existing solutions across their organisations. AI deployment in front office areas such as chatbots is increasing among larger players such as retail, rapidly resolving common enquiries 24/7.

 

Rob Smith

Hidden pitfalls of AI expansion

However, although many finance organisations are achieving successful results from these kind of AI deployments, scaling up enterprise-wide often remains elusive. For many finance firms, AI expansion often exposes underlying problems. AI projects can still over-run, overspend and fall short in terms of results. The most common constraints are:

  • Legacy infrastructure limitations

Huge AI processing requirements exhaust data centre and network capacity, causing latency issues or even outages. Trying to share actionable insights with stakeholders in multiple locations can reveal further weaknesses in legacy infrastructures, which haven’t been designed to share such datasets securely at speed and scale. All too often, this can lead to poor user experiences and collaboration challenges.

  • Internal resource and expertise gaps

Specialist IT skills are required to optimise AI workloads and enable an organisation to realise its full business benefits. Most finance firms aren’t able to employ and retain large, multi-skilled IT teams, or devote adequate resources to ensure long-term AI success.

  • Unplanned expense

Many IT budgets are being stretched to accommodate new technologies. Of course, total cost of ownership (TCO) doesn’t stop with acquiring the AI solution itself; it also includes implementing and maintaining the right IT infrastructure and integration systems to support long-term AI deployment.

 

Increasing your chances of AI success

To satisfy these extra IT infrastructure requirements, finance firms are increasingly moving to the cloud. Many companies use a combination of cloud and on-premise platforms to give them the agility and scalability they need for high loads, without the need to own and maintain massive unused capabilities during quieter times. Research shows that the businesses enjoying the biggest gains from AI are taking more advantage of cloud infrastructure than their peers.

With the added pressure AI brings to in-house teams, many organisations quickly realise that trying to achieve this perfect mix of infrastructure, resources and skills on-site is simply not feasible.

Infrastructure-as-a-Service (IaaS) removes those problems and provides a cost-effective foundation for AI growth. Providing on-demand access to computing power and storage via the cloud, it allows firms to overcome legacy issues, while offloading hardware costs, upgrade burdens and skilled resourcing requirements to a managed service provider (MSP). This route quickly pays back with savings on data centre space, infrastructure, licensing, support, training and headcount, providing a fully-managed service in a predictable, monthly OpEx model.

 

Selecting the right MSP

Having decided to explore the IaaS route, rigorously check the MSP’s technical credentials. Here are five key questions to ask:

  1. Do they have a strong track record in finance and can help you meet industry and regulatory requirements?
  2. Can you retain necessary data and workloads on-site, while accessing the latest technologies across public, private and hybrid cloud environments?
  3. Can they evidence expertise to deploy the right IaaS solution with ongoing management, optimisation and UK-based 24/7 support?
  4. Do they have expertise in high-performance graphics processing units (GPUs) capable of handling vast and complex workloads simultaneously, which are essential for rapid AI and real-time business analysis?
  5. Do they have end-to-end expertise from devices, connectivity and cloud to storage, security and UX?

IaaS solutions are empowering organisations with more effective handling of complex AI workloads and headache-free management. In today’s resource-strapped environment, this route is helping finance firms stay ahead of the competition, providing new flexibility, speed and scalability on a realistic budget and time frame. The leading finance firms are increasingly leveraging as-a-Service models to unlock greater ROI from new technologies. This trend is accelerating digital transformation across the sector and enabling IT leaders to unlock greater strategic benefit.

Finance

Why You Should Work on Your Financial Literacy

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Ebo Aneju

 

A lack of financial understanding plagues our society. Most people have very little understanding of finances, which means they struggle when making crucial financial decisions.

Making correct financial decisions is more critical than ever. The UK is currently in a cost of living crisis, and inflation has risen to around 9%. This means many people are seeing their disposable income fall quite rapidly.

Buying essentials such as energy and fuel is becoming increasingly difficult for many households as you will have noticed, fuel and energy prices with the energy inflation rate at an incredible 28%!

This means working on finances and ensuring you can sustain your lifestyle is something we currently need to focus on. Falling into debt is something that you should definitely avoid!

Read on to find out more about financial literacy and how it can help you manage your living costs.

What is Financial Literacy?

Financial literacy is the ability to use and understand various financial skills. For example, if your financial literacy is strong, you should be able to use skills such as budgeting and investing to make correct financial decisions.

This includes decisions such as mortgages and opening bank accounts. Mortgages are some of the most important financial decisions people will ever make. Mortgage payments will take a large chunk of your monthly income, and it’s a big commitment.

Financial literacy isn’t only about lifelong decisions such as mortgages. Improving your financial literacy will help more minor priorities such as your daily spending and subscriptions.

How Can Improving Your Financial Literacy Benefit You?

Ideally, everyone should have a good understanding of financial literacy. Borrowing money is a large part of modern life, with most people using loans regularly. Loans are not a bad thing and are, in fact, very helpful, but unmanaged borrowing can be very dangerous.

Strengthening your financial literacy can help you properly acknowledge the risks of borrowing money. This means you’ll be able to conduct a cost-benefit analysis to see if taking out a loan will benefit you in the long run.

This will prevent you from getting into some sticky situations where you overestimate your repayment abilities. Deferring on a loan will have many repercussions that will last most of your life.

Improved financial literacy can also help you manage day-to-day spending. One skill in the package of financial literacy is budgeting. Budgeting effectively will help you decrease unnecessary spending and increase savings.

A more significant savings account will help you apply for a mortgage. Furthermore, you’ll be able to react to any unexpected expenses that come your way. This will also help you increase your financial stability.

Increasing your financial literacy also means improving skills such as investing. Investing can help you increase the size of your savings and also your monthly income if done correctly. This will again help you fight against rising costs due to inflation.

Methods to improve your financial literacy

Start Budgeting

Budgeting is beneficial and pretty simple to start. A budget is a financial plan for a period of time and will help you track what you’re spending and increase your savings.

Budgets are pretty simple to outline nowadays. Many budget apps can help you track your spending and monitor your spending vs your saving. Make sure your budget is realistic, and you can actually stick to it.

Keep tabs on your Credit Score

Your credit score is fundamental when taking out any loans. A good credit score will give you access to the lowest interest rates, which will make the loan a lot cheaper.

Moreover, if your credit score is very poor, some lenders will be unwilling to lend you money, making finding loans much more complicated. A healthy credit score will make it easier and cheaper to take out loans. This will help boost your financial literacy in the long run.

Give Yourself a Savings Goal

Many people struggle to save because they don’t stick to their saving goals. One trick is to set out some money as soon as you get paid. By effectively paying into your savings account first, it makes sure you focus on boosting your savings account.

Most people wait until the end of the month and put any spare change in their savings account. Although this can work if you’re consistent, it’s very tempting to blow the extra cash on some new shoes or other luxuries. If you set out money for savings first, you won’t have to deal with this temptation.

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Business

A new beginning for financial services B2B marketing

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Financial services B2B marketing is dead. A bold statement with B2B ad spend set to pass $30bn next year in the US alone. But it is dead, or at least, it’s dead boring.

B2B marketing has long carried a reputation for being dull, lacking emotion, heart or guts. Indeed, the same could be said for financial services, with its technical jargon, long-winded T&Cs and an array of complex services and products to promote. Put the two together and you have a considerable marketing challenge on your hands.

Michael Richards

But there are green shoots of change springing up on the beige horizon, as financial services businesses begin to recognise that they deserve better and start to see the lessons to be learned from their B2C peers. For example, many financial services B2B brands moved to digital to refine client experiences and grow relationships during the pandemic, meaning they could connect with businesses in a more accessible way through tailored and creative solutions. But it’s not enough to just convince a business to buy a product or service with a smattering of data and a selection of charts. There needs to be a focus on provoking the truth about these progressive brands; giving them what they deserve: intelligence, imagination and emotion to provoke their truths and tell their stories in ways that just can’t be ignored.

There are so many financial services B2B brands that are missing the mark on creating provocative work and telling their stirring stories. The industry is full of inspiring stories but needs to adopt the techniques of B2C (and fast) to avoid being left behind.

Below, I’ve outlined three approaches B2B financial services marketing should take from B2C:

 

Be 100% brand and 0% product

Let’s look at the lessons we can learn from one of the biggest brands in the world. Coca Cola used to advertise on a single poster with simple descriptive messaging that didn’t make a lot of sense … but that was in the early decades of the 20th century. Coke is now one of the most instantly recognisable brands in the world. It has evolved so much from that early uninspiring product messaging that some Coke ads today feature nothing more than a red background, a white glass bottle silhouette and the message ‘Open Happiness’. 0% product, 100% brand.

Financial services business brands can learn a lot from this. Very few are tapping into the vocabulary of emotional marketing. They sell their product in line with industry jargon, expecting their ever-changing audience to understand what they mean. When really their product or service should be learning to speak a new language. One that showcases the brand over the product, communicating to their audience with a personality and values of their own.

No company can rely solely on their product features because no product is unique anymore. The power of a brand can generate that differentiating value that will set it apart from the competition.

 

Use data to personalise your offer

Data is the beating heart to personalisation. It gives businesses the foundation to build a product that is bigger and better than its competitor. One that entices new audiences while maintaining loyalty.

Consumer brands are obsessed with collecting data to better their product and reach audiences far and wide. In fact, nearly 90% of UK shoppers will hand over their personal information for improved online customer experiences.

B2B businesses also use data, but on a much narrower scale. In a survey of B2B companies, only 25% of B2B businesses use data weekly to understand customer needs, while 9% admitted they never use data at all. This is evident given that 47% of B2B buyers who need a new financial service go straight to their existing bank, and 75% of those who claim to shop around also end up with their current bank. Most buyers don’t even consider more than two brands. Meaning lots get left behind.

This is where B2B marketing shouldn’t just rest on its laurels of tedious white papers and limited data. It should inject its own personal touch and emotion by undertaking its own research and data collection to produce insightful pieces of research and showcase its unique findings. This can include specific consumer trends and behaviours in the financial services space, so they can really understand their audience and further improve their product.

 

Be audience aware

Audience Blindness is a condition that hinders B2B brands from seeing that business decision-makers have changed. They have become younger; they’re millennials. The content they consume is worlds apart from what their predecessors consumed and is constantly evolving – particularly as we enter Web 3.0 and the metaverse.

Even in the finance sector, B2B marketing is still about appealing to ‘people’ and their needs. B2B isn’t a machine and shouldn’t just cater for a computer. It needs to connect to real life audiences – those with feelings, thoughts and emotions. Because behind every business partnership is a room full of people interacting, debating and sparking ideas.

The B2C financial services sector has progressed significantly, understanding changes in audiences and catering to new needs and desires. The rise in neo-banking, investment made easy and services specifically for young adults and children looking to save is testament to this. They’ve introduced digital-first approaches, influencer techniques and new ways of improving the shopping experience through buy now, pay later (BNPL).

We’ve seen glimpses of B2B’s new beginning, but its future is to live in the present, and inject it with the power of B2C. Only then can B2B see the new audience, hear the new market and feel the new world.

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