{"id":408,"date":"2017-05-04T11:18:34","date_gmt":"2017-05-04T09:18:34","guid":{"rendered":"http:\/\/aireligion.org\/?p=408"},"modified":"2017-05-04T11:18:34","modified_gmt":"2017-05-04T09:18:34","slug":"financial-institutions-turning-to-artificial-intelligence-for-data-mining-cost-savings","status":"publish","type":"post","link":"https:\/\/aireligion.org\/?p=408","title":{"rendered":"Financial institutions turning to artificial intelligence for data mining, cost savings"},"content":{"rendered":"
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BB&T Corp. has a well-earned reputation for being deliberate when it comes to adopting technological advances.<\/p>\n<\/div>\n

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That\u2019s why BB&T executives\u2019 enthusiasm for plugging artificial intelligence and robotics into its back-office, customer service and compliance operations has raised eyebrows with analysts and economists.<\/p>\n<\/div>\n

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BB&T joins Wells Fargo & Co. and other national and super-regional banks in spending hundreds of millions of dollars to pursue what they believe will be significant future cost savings from data mining of customer patterns.<\/p>\n<\/div>\n

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\u201cWe are investing in improving processing cost\u2014 a big opportunity for us and frankly all banks \u2014 by the use of artificial intelligence and robotics,\u201d Kelly King, the bank\u2019s chairman and chief executive, told analysts during its first-quarter earnings report April 20.<\/p>\n<\/div>\n

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\u201cWe will be pretty aggressive about that. We just think there are huge ways to reduce cost in the backroom by the use of that.\u201d<\/p>\n<\/div>\n

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Forbes magazine called artificial intelligence\u2019s potential for financial institutions \u201cimmense\u201d because of its broad operational reach, such as: \u201cincluding natural language processing (improving interactions between computers and human languages); machine learning (computer programs that can \u201clearn\u201d when exposed to new data); and expert systems (software programmed to provide advice) that help machines sense, comprehend and act in ways similar to the human brain.\u201d<\/p>\n<\/div>\n

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According to analysts, financial institutions have been slower adapters of AI and robotics.<\/p>\n<\/div>\n

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Yet, research firm The Financial Brand said those companies are recognizing \u201cthe potential for cloud computing and machine learning algorithms, along with rising pressures brought by new competition, increased regulation and heightened consumer expectations.\u201d<\/p>\n<\/div>\n

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\u201cThey all have created a \u2018perfect storm\u2019 for the expanded use of artificial intelligence in financial services,\u201d such as product delivery, risk management and marketing.<\/p>\n<\/div>\n

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\u201cNew cognitive-based solutions also enable a more pro-active and personal customer experience at a lower cost than was ever possible before,\u201d The Financial Brand said.<\/p>\n<\/div>\n

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The group said its 2017 retail bank trend report determined that increasing use of AI and robotics was the second most popular expectation of financial institutions.<\/p>\n<\/div>\n

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\u2018In the first inning\u2019<\/h2>\n<\/div>\n
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The drawbacks cited to AI and robotics are familiar ones when it comes to new technology, according to a survey conducted by Narrative Science in conjunction with the National Business Research Institute.<\/p>\n<\/div>\n

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About 12 percent of participants said they hadn\u2019t put AI to use because they felt it was too new, untested or weren\u2019t sure about the security.<\/p>\n<\/div>\n

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King said BB&T\u2019s use of AI \u201cis sort of in the first inning. We\u2019ve actually tested some areas to be sure that we are so comfortable with the whole concept of AI and robotics working.\u201d<\/p>\n<\/div>\n

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King told analysts of one example conducted by Daryl Bible, its chief financial officer, that impressed BB&T\u2019s management team.<\/p>\n<\/div>\n

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\u201cDaryl did a test in his financial reconcilement area,\u201d King said.<\/p>\n<\/div>\n

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\u201cWe took one process where a human working with a computer took two hours to do the track and solve the process. Once we applied AI and robotics, it was only 15 minutes.<\/p>\n<\/div>\n

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\u201cSo, we are engaging some people specialized in this area to help us over time. We will learn how to do this for ourselves, but we are using outside expertise.\u201d<\/p>\n<\/div>\n

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King said incorporating AI and robotics \u201cis a big deal.\u201d<\/p>\n<\/div>\n

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\u201cWhen we get our methodology being fine-tuned, we\u2019ll boost up the entire company, starting with the most sensitive opportunities and then moving down.\u201d<\/p>\n<\/div>\n

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BB&T said it plans to spend between $400 million and $500 million in capital expenditures, the \u201cgrand majority frankly would be technology spends,\u201d said Chris Henson, BB&T\u2019s president and chief operating officer.<\/p>\n<\/div>\n

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King said the bank plans to use the cost savings from AI and robotics to invest in digital products, new markets and \u201creally keep a tight lid on the background expenses.\u201d<\/p>\n<\/div>\n

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\u201cThat\u2019s why we\u2019re optimistic in terms of longer-term operating leverage, because we will have to continue to invest in new technologies, etc., but at the same time we\u2019ll simultaneously reduce on the cost our traditional process-oriented activities.<\/p>\n<\/div>\n

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\u201cFrankly, I\u2019m pretty excited about it. It\u2019s a bit early if you were to claim victory, but the concept is really sound.\u201d<\/p>\n<\/div>\n

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Facebook platforms<\/h2>\n<\/div>\n
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Wells Fargo said its initial AI push involves launching a pilot of a customer chat experience for Facebook Messenger.<\/p>\n<\/div>\n

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The bank has provided assistance to customers on Facebook platforms since 2009, including adopting that format in May 2016 as its main channel for addressing customers\u2019 common questions and service issues.<\/p>\n<\/div>\n

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The test involves several hundred employees before making it available to a few thousand customers later this spring.<\/p>\n<\/div>\n

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\u201cWe\u2019re very excited about the opportunity to provide more personalized services for customers,\u201d said Steve Ellis, head of Wells Fargo\u2019s Innovation Group, where the company\u2019s Artificial Intelligence Enterprise Solutions team is based.<\/p>\n<\/div>\n

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\u201cOur goal is to deliver information \u2018in the moment\u2019 to help customers make better informed financial decisions. AI technology allows us to take an experience that would have required our customers to navigate through several pages on our website, and turn it into a simple conversation in a chat environment.\u201d<\/p>\n<\/div>\n

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Wells Fargo said it plans to emphasis AI and robotics in its Payments, Virtual Solutions and Innovation group \u201cas it sees an increasing number of opportunities to better leverage data to provide personalized customer service through its bankers and digital channels.\u201d<\/p>\n<\/div>\n

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Ripple effects<\/h2>\n<\/div>\n
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Analysts and economists were mixed about the potential ripple effects from financial institutions increasing their use and focus on AI and robotics.<\/p>\n<\/div>\n

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\u201cBank margins remain under pressure and the competition from financial technology companies means margins won\u2019t return to levels seen in the past,\u201d said Greg McBride, senior financial analyst with Bankrate.com<\/a>. \u201cSo the pressure to reduce overhead costs is ever-present.<\/p>\n<\/div>\n

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\u201cThe consumer banking experience is becoming increasingly digital, and the organization needs to be less labor intensive to meet the demands of tomorrow\u2019s customer.\u201d<\/p>\n<\/div>\n

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Chris Marinac, managing principal with FIG Partners LLC of Atlanta, said he is encouraged that more banks are preparing to make a big splash with AI and robotics.<\/p>\n<\/div>\n

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\u201cBB&T is very serious about this initiative; they do not mention items on the conference call without careful consideration.<\/p>\n<\/div>\n

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\u201cThis AI\/robotics trend is very real in my mind and has seriously positive implications for the expense base, profit ratios and shareholder returns in the future.\u201d<\/p>\n<\/div>\n

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Tony Plath, a finance professor at UNC Charlotte, said the AI and robotics \u201ctrain has long left the station, but that\u2019s true in every industry and in every advanced economy today.\u201d<\/p>\n<\/div>\n

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\u201cWhy should banking be any different?\u201d<\/p>\n<\/div>\n

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Plath said most financial institutions have a research and development effort under way to reduce the human work force and replace it with some sort of automated delivery platform.<\/p>\n<\/div>\n

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\u201cHuman labor is the most expensive, unreliable and mistake-prone element in any product or service delivery channel,\u201d Plath said. \u201cTake out the people and you get faster, better, more reliable, more consistent and cheaper products and services.<\/p>\n<\/div>\n

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\u201cRobotics will automate much of the back-office operations and support work of these organizations, and robo-advisors will automate the front-end of the businesses.<\/p>\n<\/div>\n

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\u201cTalking with a human expert in any of these industries will become the exception, rather than the rule, of normal business operations.\u201d<\/p>\n<\/div>\n

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Job displacement<\/h2>\n<\/div>\n
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Plath acknowledges there will be significant repercussions for the economy as more bank and credit union employees are displaced from jobs by AI and robotics advances.<\/p>\n<\/div>\n

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\u201cWe\u2019re already seeing that sort of thing in the unskilled segment of labor markets throughout the advanced economies of the world,\u201d Plath said.<\/p>\n<\/div>\n

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\u201cOver the course of the next 20 years, it will include semi-skilled labor and then fully-skilled labor, and even advanced skilled labor, like physicians and college professors.\u201d<\/p>\n<\/div>\n

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Plath said that technology advances, \u201cthe future is gonna get here much faster than you think.\u201d<\/p>\n<\/div>\n

JournalNow<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

BB&T Corp. has a well-earned reputation for being deliberate when it comes to adopting technological advances. That\u2019s why BB&T executives\u2019 enthusiasm for plugging artificial intelligence and robotics into its back-office, customer service and compliance operations has raised eyebrows with analysts and economists. BB&T joins Wells Fargo & Co. and other national and super-regional banks in … Continue reading Financial institutions turning to artificial intelligence for data mining, cost savings<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[9,3,2],"tags":[],"_links":{"self":[{"href":"https:\/\/aireligion.org\/index.php?rest_route=\/wp\/v2\/posts\/408"}],"collection":[{"href":"https:\/\/aireligion.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/aireligion.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/aireligion.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/aireligion.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=408"}],"version-history":[{"count":1,"href":"https:\/\/aireligion.org\/index.php?rest_route=\/wp\/v2\/posts\/408\/revisions"}],"predecessor-version":[{"id":409,"href":"https:\/\/aireligion.org\/index.php?rest_route=\/wp\/v2\/posts\/408\/revisions\/409"}],"wp:attachment":[{"href":"https:\/\/aireligion.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=408"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/aireligion.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=408"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/aireligion.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=408"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}