May 20, 2019
May 20, 2019
We are all familiar with Artificial Intelligence (AI), even if most of us might not be able to explain it. In simple terms, AI is computer-generated technology that simulates human intelligence. It is the basis for two perennially cheerful characters that many of us speak to every day: Apple’s intelligent assistant Siri and Amazon’s virtual helper Alexa. AI is also the brain behind millions of recommendations on Netflix and Amazon. It powers self-driving cars and makes impressively accurate Fantasy Football predictions.
Given the sheer utility and ubiquity of AI, it’s no surprise that companies across all industries are willing to spend to get in on the game. Global spending on AI-related technologies is set to grow from $1.5 billion in 2017 to $2.8 billion in 2021.
With these innovative technologies in mind, is your board ready to work with management to lay the best roadmap to success for your company? Let’s turn first to some examples of how companies are putting AI to work now.
In financial services, AI is already being used to speed up the process of opening a bank account by extracting information from images and documents that the customer can submit through a mobile app. This reduces the on-boarding process to minutes instead of hours and helps grow the bank’s customer base since, according to a recent study, 38 percent of customers will abandon the account opening process if it takes too long.
AI is also being used to help nudge customers to improve their financial lives and save more money. Consider the fact that 40 percent of American households don’t have enough savings to cover $400 in emergency expenses. Similar to how your Nest thermostat learns your preferences of temperature control, personal wealth planning applications learn your spending patterns, risk profile, and investment preferences, and suggest ways to change your behavior to increase savings.
In addition to improving the customer experience, banks are looking to AI to help improve the bottom line. More than 60 percent of participants in a recent NACD webinar said they would invest in AI for increased efficiency and productivity in their operations. AI’s ability to eliminate errors, improve customer service, and automate processes can exceed 80 percent in specific scenarios, so it is not surprising that AI is becoming a central strategic theme in many organizations.
It’s likely we’ve only seen the tip of the iceberg in terms of AI applications within the financial services industry, let alone many others. There is already talk of using AI in the loans space to review documents in place of lawyers, and to make better decisions about borrowers when market data is scarce.
But I know there are lingering worries about AI emerging in conversations in boardrooms worldwide. Every quarter there seems to be a new technology that promises to address all of yesterday’s problems. While there are certainly many success stories and examples of improvements from AI, there are also implications to a company’s strategy, operations, and culture. For example, concerns about the potential impact on the company culture and employees present a real risk.
But so are the risks of not embracing AI, since there’s little doubt your competitors will. To move forward with a smart AI strategy, here are some questions that can help your board define the company’s AI goals:
And the central theme of all of these questions should be: How is this ultimately helping our customers? AI technology can facilitate quantum jumps in the ease of doing business, the accuracy and timeliness of services, and data delivered, but the focus should be on the customer’s needs first.
Best practices in this space have deep roots in other management theories, but have evolved to reflect recent successes at enterprises across industries as companies explore the possibilities of AI. A winning strategy boils down to customer-focused design, data preparation, a prototyping plan, and buy-in from your employees.
Directors shouldn’t doubt the utility of AI and that it has a role to play. The technology of today has the potential to transform our clients’ experiences, leveraging our subject matter experts as we increasingly connect the dots to consider the end-to-end client lifecycle. But these opportunities are not without risk, and nirvana is rarely reached without discussions about the roads to take along the journey. It’s worth having these conversations today if we wish to harness the power of AI tomorrow.
Interested in hearing more from Broadridge’s Michael Tae on AI? Listen to a recent NACD webinar about the reality of AI here.