Financial Institutions Must Sell Public on AI Benefits or Risk Losing Them

Building trust in new technology can be difficult when the public gets ‘Rise of the Robots!’ and ‘AI Ate My Job’ vibe in mainstream media. While major institutions have already reaped benefits for shareholders, banks and credit unions that want to adopt artificial intelligence and take it further must show consumers how they will also win.

Artificial intelligence and automation are starting to help financial institutions’ bottom lines. However, pushing AI usage beyond early adopters to a greater share of the industry will require surmounting a vital obstacle: consumers’ broad lack of trust in AI systems.

Part of the challenge is terminology. AI is often written about informally, and words such as “robot” conjure images of job-stealing automation and social media programs designed to hijack human sentiment. But questions are raised in more thoughtful venues as well. In one commentary on the future of AI in financial services, the Brookings Institution think tank spoke of the need to be open about the limitations of AI. The article said that this was “crucial, as miscalculating the true potential of AI algorithms can create wicked consumer protection problems, especially when financial products and services are involved.”

The stakes are significant for financial players, but also for consumers who value what’s already been offered.

How AI has Assisted Financial Institutions Thus Far

Several major banks have reported generating significant savings and positive returns on their investments in these technologies. JPMorgan Chase’s cost to serve customers of all types has decreased 15% over the last five years, while Bank of America’s spending has fallen by as much as $1 billion per quarter, helping it invest in upgrades to branch and ATM networks.

Thanks for much of this impact goes to consumers’ own growing use of AI and automation tools to complete banking tasks and interact with financial institutions. Bank of America has cited consumers’ increased use of its Erica chatbot as a key cost saver. Increasingly Erica has automated interactions that previously took place through costly call centers. Bank of America recently reported that more than 7 million of its customers have used the chatbot to conduct more than 50 million interactions.

The example of Erica and other financial institution chatbots highlights the importance of driving customer adoption of AI and automation capabilities. Chatbots, which typically sit within bank mobile apps or websites, still have considerable room to grow. Bank of America previously reported more than 25 million customers are using its mobile app altogether — so most haven’t interacted with Erica yet.

Another benefit for consumers is seen in credit: AI allows lenders such as Marcus by Goldman Sachs and Lending Club to deliver credit decisions within seconds.

Consumers worry about financial fraud, and the use of AI to reduce fraud through pattern detection is becoming widespread. Rather than isolating each transaction as a single event, financial institutions use AI to examine the flow or continuum of transactions. Wells Fargo, JPMorgan Chase and Ally Financial are all employing automated monitoring systems that apply this cohesive view of transactions.

Banks such as BNY Mellon are employing robotic process automation (RPA) to reduce costs and improve operational efficiency. Forrester predicts the RPA market will reach $2.9 billion by 2021. BNY Mellon reported an 88% improvement in transaction time in its trade-settlement system, just one backend operation increasing its use of automation. BB&T and SunTrust — soon to combine as Truist — are both RPA users, which SunTrust has deployed in its payments operations.

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