Artificial intelligence is disrupting the global financial services sector: by driving growth from transforming customer experience, streamlining labor-intensive tasks and helping to mitigate heightened compliance risk.
Once considered a conservative sector, now financial organizations exhibit one of the highest AI adoption rates globally.1
In 2023 alone the sector invested more than US$35 billion in the technology, with banks accounting for nearly two-thirds (US$21 billion) of that outlay.2
A new era of AI-powered customer-centricity
So, what’s driving this?
Financial services and insurance (FSI) firms are in a highly regulated and competitive sector. AI can solve long-standing compliance challenges as well as improve customer experience and product design.
The technology is empowering companies to identify new market opportunities and nascent consumer demand, so they can deliver new products and services that resonate with consumers.
AI is also helping to unlock a new era of hyper-personalization, for example, enabling FSI organizations to automatically digitize, store and analyze individual customers’ interaction data.
Customer service calls can be transcribed using AI, stored automatically in a CRM and analyzed using AI to enrich and personalize future interactions to enhance customer service and improve customer outcomes.
Friction-free customer onboarding
Forward-thinking FSI firms have also discovered AI can streamline lengthy onboarding processes, which would otherwise risk deterring new customers.
AI can help ingest and validate new customer data, including online identity validation, boosting AML and KYC compliance in the process.
“Such levels of analysis require huge amounts of data,” says Michael Nicholls, Principal, Financial Services Consulting at EPAM, “but thanks to cloud environments like AWS, banks and insurance firms can now store and process more information at speed than ever before.
“Leading cloud platforms, such as AWS, take care of data migration, lifecycle management, storage and security. They’re cost-effective, and scalable almost at the click of a mouse, enabling CIOs to focus on driving additional value.”
Mitigating increased compliance risk
AI may be a source of great opportunity for FSI institutions, but its use by tax authorities to conduct audits that are exponentially more granular also exposes new levels of compliance risk.
In one recent case, France’s financial regulator fined one of the world’s biggest banks, Credit Agricole, €1.5 million for anti-money laundering violations discovered using AI.3
The regulator’s LUCIA AI solution exposed irregularities hidden within 750 million transactions going back two years.
It enabled regulators to analyze payment references, currencies used and the location of transaction beneficiaries, and cross-reference that data with customer due diligence files to pinpoint suspicious activity.
This shows that CIOs at FSI institutions must, at the very least, achieve tech parity with auditors empowered by AI to mitigate regulatory risk.
Conclusion: AI is now a key FSI tool
AI adoption is now a critical step toward keeping pace with innovation within the wider market. Analysts IDC predict that 50% of the top 100 Banks will hyper-personalize customer rewards and loyalty programs by 2026.4
With a new era in train, CIOs in this space must start to execute their plans.
Discover how EPAM can help you boost productivity and customer experience in the FSI sector industries.
1Statista: Artificial intelligence (AI) in finance – statistics and facts: Artificial intelligence (AI) in finance – statistics & facts | Statista
2Ibid
3Moneylaundering.com: France Fines Credit Argicole After Analysing 750 Million Transactions Using AI: https://www.moneylaundering.com/news/france-fines-credit-agricole-after-analyzing-750-million-transactions-using-ai/
4IDC Futurescape, Worldwide Banking 2024 Predictions, October 2023, https://www.idc.com/getdoc.jsp?containerId=US51290623