Deloitte makes a convincing argument that artificial intelligence is the future of the financial services industry. Their online report outlines several insights as to why the institutions who have not embraced this technology might be too far behind to catch up.
You can see the entire Deloitte AI Leaders in Financial Services report here. These are their key findings.
Financial Services AI Statistics to Know
Frontrunners are defined as companies that achieve the highest financial returns because they have a significant AI presence internally. Followers are somewhere between the beginning and the end of their journey with this technology.
Late adopters are those that are just now beginning to look at the benefits of artificial intelligence.
1. 19% of revenue growth for frontrunner companies that provide financial services is directly attributed to the implementation of artificial intelligence initiatives. Follower firms can only achieve 12% with AI.
2. 3 out of every 5 frontrunner companies define AI success through improvements to revenue. 47% of them include benefits to the customer service experience.
3. 45% of firms with frontrunner status say they are investing over $5 million into artificial intelligence initiatives. That amount is three times higher than the companies that are followers or late adopters.
4. Almost half of the frontrunners have detailed and comprehensive strategies for AI adoption that all internal departments are expected to follow, giving these firms more immediate scalability than their rivals.
5. 70% of the agencies that embrace artificial intelligence concepts are also using machine learning to improve their services.
6. 60% of financial services frontrunners with AI are using Natural Language Processing.
Risks Associated with Using AI in Financial Services
AI development in the financial services sector is not without risk. The vulnerabilities of cybersecurity with machine learning and artificial intelligence rank as the most concerning problem that faces the industry today.
Even when companies are frontrunners in this area, there are extreme concerns to manage regarding AI implementations.
Financial services firms are also severely concerned about making incorrect strategic decisions based on the recommendations offered by AI assets.
There are regulatory non-compliance risks to consider, erosion of customer trust, and ethical risks that may need management in the future.
How Institutions Are Using AI
Artificial intelligence offers a faster decision-making process with a more accurate assessment of potential borrowers and customers. That means it is possible to extend credit to people in more ways than it is when using traditional evaluation methods.
When lending companies that focus on car loans use artificial intelligence to determine their needs, it cuts their losses by 23% each year.
This process also creates benefits in the area of fraud protection. AI can analyze the behavior of clients, purchasing habits, and other data to trigger security mechanisms that initiate a review. If something seems out of order, then some institutions will contact their customers immediately to see if the activity is authorized. It is so effective that it can cut the investigative workload by up to 20%.
Deltec Bank said, “Automation through AI is the future of the financial services industry. Those who adopted this technology early will see the best results, but everyone can experience some benefit if they are willing to embrace this change.”
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.