Loathed and loved, artificial intelligence (AI) technologies are steadily making their way into more and more industries. According to a study conducted by Accenture for the Hessian Ministry of Finance, AI will increase German work productivity by 29 percent in 2035. The study predicts that the banking sector in particular could benefit from automation and AI, with an increase of gross value added of 4.3 percent.
But this could remain a mere projection, says Tarek Al-Wazir, the Hessian Minister of Finance. “AI will play an essential role in deciding the competitiveness of financial service providers. All their fields of activity, investment decisions, market instruments and portfolio management are affected by it and will be transformed.” Al-Wazir continues, “Without expertise in AI, banks could lose these fundamental areas of business to other players.”
The necessary changes are already underway. The rise and rapid growth of Fintechs in the Rhein-Main region demonstrates the potential in this field, particularly in Frankfurt where the stock exchange boasts 90% of German stock market turnover. The banking sector has been implementing AI largely through collaborations with start-ups such as these. Taking such steps is not only a necessity to stay in control of their business’ future, AI also offers multiple opportunities to transform and innovate individual organisations as well as the industry as a whole. Here are some examples of how:
Automatisation and streamlining
Chat bots and virtual consumer assistants are likely just the beginning. Banks and insurers are developing more and more ways to efficiently handle consumer inquiries which will lead to faster processing, for example, when handling standard insurance cases.
AI offers a whole range of opportunities for new products and services that combine digital tools, big data handling and consumers’ needs for more flexibility and personalisation. One such example, is a digital life insurance that automatically adjusts to the relevant phase of life and individual circumstances, as well as variances in fees and services.
An obvious point. For banks these new possibilities offer a whole variety of new business opportunities. As such, banks will transform not only towards there customers but also towards their employees. And they already are. Those working in the banking sector are more than prepared for the use of AI within their organization: more than 70 percent say they are expecting more and more AI technologies in their work environment within the coming years.
The study suggests that those who embrace these opportunities will be rewarded. Even with AI technology in its early stages, almost two-thirds of consumers today are prepared to grant greater access to their personal data in exchange for better and more personalised services. After years of cutting back on local branches and touch points, this may actually be the opportunity for financial industries to win back consumers.
This article is part of Techobservers’ AI series, kicking off with the launch of “Hessens Ambitionen für Künstliche Intelligenz”, a roadmap to fostering AI in the Rhein-Main region.