Finance takes a keen interest in new technologies and the various services and functionalities that could be integrated with these technological advances. Also, it should be noted that new technologies are sometimes considered a threat to the world of finance, especially banks with cryptocurrencies which are in the news with the bull run that Bitcoin is currently experiencing. However, in this analysis we will focus on another technology, whose relationship with the financial sector is more fused: Artificial Intelligence, also called AI.
Artificial Intelligence (AI): presentation and field of application
Advances in business IT have brought new technologies in finance to the forefront. Artificial Intelligence is a branch of business computing that allows a machine to automatically reproduce certain aspects of human intelligence. The goal is to perform specific tasks automatically. AI therefore makes the work of financial players less complex, more reliable and faster.
Its field of application is quite wide, the best-known areas are accounting, customer service and human resources. Banks and other companies in the financial world such as insurance and wealth management companies are the most interested given the large and growing number of data to be processed on a daily basis. They have computerized all of their services, so this technology is beneficial to them.
Being a very large industry, the impacts of Artificial Intelligence are as vast as the world of finance. To demonstrate the importance of AI, already in 2018, La Tribune revealed that 30% of digitization projects in the banking sector are mainly designed on AI.
The main advantage of digitization is to make a number of services available 24/7. With the contribution of Artificial Intelligence, these challenges are amplified. Thus, Artificial Intelligence increases the number of services available, speeds up processes in order to make them instantaneous, and finally, allows the personalization of these.
One of the goals of combining these technologies in finance is to make it ubiquitous. In the long term, we can project ourselves into a fully APIsed universe, allowing the transfer and analysis of data to determine prices adapted to the situation of each user. Currently, this work begins with DSP2 regulations and solutions such as Particeep Plug that turn any website into a point of sale for banking and insurance products.
Artificial Intelligence and Corporate Finance
In order to track their accounts, more and more companies are using digital solutions that offer Artificial Intelligence features with multiple benefits.
The innovation brought by artificial intelligence in many areas of finance now allows a new management process to be implemented. Payroll and invoices are a major challenge for accountants especially in large companies. With Artificial Intelligence this task becomes much less complex.
AI makes it possible to implement new procedures in customer relations, transaction processing, in fact, support is far faster and more accurate than before.
Artificial Intelligence will therefore have a great impact on the finance professions at several levels; at the method level, it will transform the customer experience. In terms of customer relations, it will:
• Guide the client to find the information he needs;
• Satisfy all these needs in real time;
• Inform the customer of each interesting new offer.
In terms of accounting, it will:
• Establish pay slips more quickly;
• Recognize invoices more quickly;
• Identify and record arrears more quickly, etc.
IA: banking and insurance
The fields of banking and insurance are quite similar in their operations. For these sectors, the best-known use case is the chatbot. The latter being able to go even further as new versions and new products are launched. Not only, but especially for these businesses, data is becoming increasingly important in providing answers to customers.
So, for example, Erica, the Bank of America chatbot, not only answers general questions to make an appointment, but can notify a requesting customer if they have recently received any refunds.
Artificial Intelligence is obviously not just limited to improving the services offered to customers. There is a range of initiatives that will support banks and insurance companies.
We cannot mention all the use cases because they are so many and varied. For example, in 2019, cheque fraud increased by 20%. In order to counter this dynamic, as the LeMonde newspaper explained in an article published on February 1, 2021, banks are adopting Artificial Intelligence solutions.
We cannot talk about Artificial Intelligence and also of new technologies in general without mentioning one of the biggest criticisms of it: they replace the work of humans. A first observation is that, indeed, certain uses of Artificial Intelligence can replace certain professions. However, for many use cases, Artificial Intelligence does not replace humans, but accompanies and advises them. Here are two examples of the use of Artificial Intelligence to support advisors and improve customer relations:
- Since 2017, according to Revue Banque, all Crédit Mutuel – CIC advisors have been equipped with a virtual assistant to help them organize their work by analyzing their emails, sorting according to an order of priority determined by the AI and prefilling the answer to provide;
- The Deloitte firm has implemented Artificial Intelligence for its clients. This AI makes it possible, during telephone calls, to determine by analyzing the vocabulary and voice of the customer on the telephone his current feeling and thus lead the advisor in the speech to be made.
However, it is clear that in terms of digitization, Europe is not the most advanced region in the world. In China, the insurer Ping An specializes in the application of new technologies in the world of finance. For example, already in 2018 the company offered a solution to automate claims reporting, disease diagnosis and loan granting based on artificial intelligence. For example, for the declaration of damage, even before a damaged car is brought to the garage, the solution analyzes and compares the images of the damage in order to price the repair costs and make a bank transfer to the customer bank account. One of the company’s subsidiaries raised $ 2 billion in funds in late 2020 to continue improving its lending system, already handling more than 50,000 online loan requests every minute.
AI and wealth management companies
Management companies are also developing digital tools and Artificial Intelligence solutions. Just like the banking and insurance world, there are technologies such as the chatbot. There are also technologies here to support and advise professionals and end customers.
For example, in France, as the JDN relayed in an article in October 2020, Société Générale, as well as BNP Paribas Asset Management have adopted various digital solutions, each with their own specificities, but whose objective is the creation of portfolios around the adequacy of an expected profitability and risk profile. To do this, Artificial Intelligence and machine learning solutions are combined to analyze past performance, news and comments online in articles, blogs and forums.
In February 2020, Usine Digitale announced that the Franco-German group ODDO BHF was launching its Artificial Intelligence solution after 18 months of research. The objective of this IA is to identify companies in which ODDO BHF Asset Management should invest in.
Over the longer term, we can expect Artificial Intelligence to be more present in day-to-day wealth management. Analyzing data on the consumption and investment habits of individuals may be more accurate in order to determining an investor’s risk profile than a simple form. For a second example, we can rely on the experience of Wealth Management Advisors (WMA) during the Covid19 crisis. In an analysis that we recently published, we explained that during the first lockdown, the WMA’s main mission was to reassure their customers and update their risk profile. In the future, we may have a dedicated WMA service that tracks customers’ internet browsing history with their consent. It will therefore be possible for an Artificial Intelligence to detect whether the client has questions about the sustainability of his investments allowing an automated connection between the client and his WMA.