TOOLS OF THE TRADE: ARTIFICIAL INTELLIGENCE
e m o h g n i r e m m Ha There’s a risk that artificial intelligence becomes the solution looking for a problem. Undoubtedly a hero technology and an indispensable part of the digital transformation toolkit, Alex King nevertheless suggests the bank of the future needs to wield it wisely From the post-war science fiction of Isaac Asimov to the present-day wizardry of Silicon Valley, artificial intelligence (AI) has, for the best part of a century, captured humanity’s collective imagination. But it’s only now that AI has ascended to what US research firm Gartner would describe as its long-awaited ‘plateau of productivity’. AI is being rolled out, booted up and plugged into tech stacks worldwide – another ‘new normal’ to get our heads around this year. And, as so often happens with technological milestones, the debate rumbles into new territory, abandoning questions of ‘when?’ for the far more pressing ‘how?’. A survey of more than 400 global banking executives, released in June by the Economist Intelligence Unit and Temenos, found that 77 per cent of respondents see AI as a key differentiator between winners and losers among banks. Get AI implementation right and banks are likely to prosper; engage with AI at the wrong time, or in the wrong way, and they will lose out to firms that made wiser, more far-sighted bets. The stakes, as we accustom ourselves to a post-AI-acceptance landscape, are incredibly high.
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Adding a further dimension to the debate are those digital-native fintechs and rapidly-digitising banks that have concluded, as Deloitte did last year, that banking customers ‘still prefer the human touch’. These financial institutions (FIs) are wavering on AI and its implementation just as the means to achieve near-total automation have finally emerged. Bringing some lucidity to the debate is Starling Bank’s Jason Maude, quoted in Banking Circle’s forthcoming white paper on the future of banks’ digital infrastructure. “Anyone who gets excited about AI,” he says, “is like someone that will get excited about hammers. AI can be a solution to a problem, but you need to make sure you have the right problem.” Maude is referencing the cognitive bias termed ‘Maslow’s Hammer’ – if the only tool you have available is a hammer, everything starts to look like a nail. The problem is, some of the foremost thinkers to apply AI to banking processes have publicly stated that AI is applicable across the board: a magical panacea for forward-thinking financial institutions.
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Having worked with university professors to produce her epochal book Decoding AI In Financial Services, Clara Durodié, founder and chair of Cognitive Finance, is one of those confident that AI has industry-wide use cases. “We’ve identified that every single business process in every single business model in financial services can be automated intelligently using some form of AI,” she declared at January’s Paris Fintech Forum. “That’s very impressive,” she added. “That’s anything from customer engagement to sales and marketing, to functional finance, like accounting, through to IT as well as legal functions. All of these are business processes that can use AI.” Given the breadth of the current implementation of AI in the financial industry, it’s hard to disagree with Durodié. Nasdaq has integrated AI in its fraud prevention and data analysis processes, while Goldman Sachs released research showing how the labour of six traders www.fintech.finance
