Alleviate “AI anxiety” with 4 ways to leverage AI tech
84% of financial services leaders believe that investment in digital transformation is necessary within the next 12 months. This eye-opening finding from our recent research report—Balancing tech anxiety & innovation—demonstrates the need for constant innovation in an industry that never stands still.
Financial services organizations across the world are investing massively in AI right now. The leading banks are already experimenting with using generative AI to enhance customer experiences on the front end and create better colleague experiences in their back office.
The report highlights the increasing importance of digital tools. 53% of financial services leaders plan to spend more on digital transformation initiatives in 2024 than in previous years, and artificial intelligence (AI) is at the top of their investment wishlist. Generative AI (GenAI) in particular, promises to transform the financial services landscape.
However, investing in this space is often met with anxiety. A hyper-competitive market means that innovation has to be balanced with profitability and business security. How can financial services leaders approach AI investment and machine learning (ML) strategically to deliver winning customer experiences and higher ROI?
Excitement and anxiety around AI
Leaders in the financial services sector are excited and energized by the potential of AI. The prospect of streamlined processes, enhanced decision-making, and new types of personalization have captured imaginations. But in the current economic climate, leaders must look beyond excitement and make smart AI investments based on value.
Our research revealed that AI is the second-leading cause of tech anxiety among financial services leaders—just behind cybersecurity. AI and machine learning threaten not only to disrupt the industry but also pose serious ethical and data security challenges. As the pace of AI development increases, these fears will only grow. However, leaders can’t afford to sleep on AI—it's one of the best avenues to higher profits and a better customer experience.
Executives are consuming plenty of content on the potential of AI—but they are still looking for safe, sustainable ways to deploy it, perhaps reminded of the sometimes wasteful and risky sprint to the Cloud.
Smart ways to invest in AI
Despite the uncertainty surrounding AI and machine learning, leaders are under pressure to choose strategic investments that generate tangible results and positively impact their bottom line. Digital transformation in financial services is only accelerating and you can’t afford to be left behind. Here are four key AI considerations that can help your organization stay ahead of the AI curve:
1. Expanding personalization
Personalization is no longer a nice-to-have—it’s something that users expect and value. 86% of customers who have experienced personalization say that it has influenced their purchasing decision in some way. GenAI positions financial services enterprises to move beyond transactional relationships and build connections with customers through tools like chatbots, personalized marketing, and tailored financial insights. AI and ML can personalize customer touchpoints, creating engaging and seamless experiences which increase loyalty.
2. Strengthening security and reducing fraud
As leaders explore the AI landscape, the issue of security is one they can’t afford to ignore. Fraud detection and know your customer (KYC) processes are critical areas where AI can enhance current efforts. AI tools excel at analyzing vast datasets and work in real-time to swiftly identify anomalies and fraudulent activities. Combining publicly available data with first-party data unlocks the greatest potential for AI tools to improve security.
3. Building client trust through transparency
Trust is as vital a currency as cash, which makes transparency a cornerstone of smart AI investments. Just as business leaders are wary of AI, so are customers. As many as 61% of US adults are concerned about technology’s growing role in daily life. Financial institutions must communicate openly with customers about how AI is utilized and what measures are in place to ensure data privacy. Establishing transparency not only builds trust with clients but also aligns with expanding regulatory expectations. Sharing AI ethics and privacy values publicly can help build trust through transparency.
4. Balancing innovation with caution
While innovation is a driving force behind digital transformation in financial services, leaders must strike a balance between pushing boundaries and ensuring the safety and security of sensitive data. AI tools should undergo rigorous testing before implementation, and those involved should have a strong and timely understanding of how these tools work. What’s more, human input is essential in ensuring AI output and analysis are accurate and in line with company guidelines.
Bringing AI to financial services
As financial services leaders prepare to navigate the rising tide of AI, strategic, informed, and ethical investments are essential. By choosing to invest in AI tools that improve personalization, strengthen security protocols, and prioritize transparency, financial institutions will not only remain ahead of the competition, but also establish a solid foundation for the future that unlocks increased ROI and customer loyalty.
Want to learn which technology investments senior leaders are planning for 2024? Read our 2024 Leadership Priorities in Tech: Financial Services report to find out.