Inspired by the publication of our research brief, “The Rise of AI in Financial Services”, I sat down with our in-house Financial Services (FS) expert, Director of Product Management, Kim Neuwirth.
Prior to her current role, Kim was at Macquarie Group, where she worked on the Corporate and Asset Finance team, as well as at Allstate Investments and Cascade Investments LLC. Kim has been in the industry for 10+ years and understands what a pivotal time it is for the industry to adopt technologies that will help them generate value from the recent explosion of data.
Our research brief is a snapshot of an industry in flux - traditional organizations are upending legacy processes and competition for customers is increasing given the variety of services options, all while the regulatory environment has never been so stringent. And in the middle of all these changes, artificial intelligence (AI) technologies have slowly made their way into various aspects of financial services organizations - opening the door to new innovations. I spoke with Kim to hear her perspective on all of these transformative changes.
From your perspective, why are AI technologies starting to become more common in the industry?
Kim: AI is growing across the entire business landscape, enabled by the explosion of data. AI technologies were originally introduced in the 1950s but they’re finally becoming useful now that they have access to all these data sets. Particularly in FS, firms have invested millions, if not more, in the process of collecting, storing and organizing vast amounts of data.
FS has actually been tracking the data long enough and has enough data - just think about the amount of transactions that are happening every millisecond - for AI to be effective. Beyond AI being effective, it is actually necessary. The sheer amount of data for analyzing, monitoring and leveraging is surpassing the point of human capacity.
What are some notable applications of AI technologies that stand out to you?
Kim: First and foremost, advanced natural language generation but obviously, I’m biased. I joined Narrative Science because I truly believe in the power of this technology after working in the industry and seeing what was needed.
When you look at FS firms, the amount of reporting required due to regulatory requirements paired with increasing client expectations is necessitating that technology become part of the solution. That can be a scary proposition when considering all the highly sensitive factors at play. So when market leaders like Deloitte start using advanced NLG in their compliance efforts, it’s an exciting sign the technology is reliable and accurate.
Machine learning vendors working within fraud or trade surveillance like Feedzai and Palantir are doing incredible work. They are enabling the examination of internal behavioral and external market factors to help identify fraudulent behaviors within a firm and at the client level. I think it will be very impactful for FS firms in the next 10 years.
Also, the partnership between Nasdaq and a cognitive computing company, Digital Reasoning, is very cool. They are providing holistic surveillance technology to global capital markets to enable compliance teams to be more proactive. More forward looking, I’m keeping my eye on smart/robotic process automation software like WorkFusion. It combines different types of AI to learn human tasks and the technology can then perform routine, repeatable tasks - it might not sound that sexy but I predict it’ll bring amazing efficiency within the FS industry.
If you could give one piece of advice to a Financial Services company about the rise of AI technologies, what would it be?
Kim: AI technologies have historically been perceived as black boxes but those days are nearing the end. Technology providers and vendors need to be able to explain how their technology works along with ensuring a level of transparency. Transparency is so important because the industry is still rebuilding trust. Technologies being deployed today must be able to support this effort. Without transparency, the technology can’t be audited or held accountable for its’ impact, which shouldn’t be acceptable in today’s environment.
Overall, it is a really unique time for the overall industry because it's not just about individual firms anymore. Of course, technology will still be used for a competitive edge but I think we’ll also start to see a new wave of technologies being applied to solve overarching industry problems. There is more collaboration happening these days, and financial services firms are increasingly being democratized. It is bringing back a positive energy overall.
For example, I look at our client, USAA. They’re using AI technologies to engage their 11 million members on a highly personalized level and it shows - they are repeatedly named a top customer service provider. It has been a long time since this industry has been able to talk positively about delighting customers and optimally servicing them. Emerging technologies like advanced natural language generation is a large part of this shift and I’m excited to see where the future takes us.