Artificial Intelligence has dominated the tech news cycle for the past few months, and that trend shows no signs of letting up. Although OpenAI and its ChatGPT product have vaulted it front and center, our clients have been using it for years behind the scenes to cut costs and improve service.
Fintech is a great example of a vertical that has benefited enormously from AI technology and not for the reasons you may have thought. AI in fintech has nothing to do with financial products themselves—it has to do with customer service. Specifically, chatbots.
I can see your eyes rolling.
Chatbots have a bad reputation, because our collective memories are filled with stories involving bad chatbots. However, if it’s a choice of waiting 10 minutes for an actual person or having my exact question—which I do realize may not be specific to me—answered in 10 seconds by a well-created chatbot, give me the bot every time. So, what’s changed?
Early chatbots were clumsy and ineffective—and annoying!—because they relied on rule-based systems that were limited in their ability to understand natural language. That is to say, the bots looked for, and responded to, specific keywords or phrases and they ignored the rest of the language in the conversation. They couldn’t understand the context of a conversation.
“My daughter is leaving for college, and I’d like to add a credit card for her in case her wallet gets stolen.”
What an early chatbot would hear would be, roughly: “Credit card stolen.”
And you’d get transferred to someone who would begin the process of locking down your credit card and issuing a new one.
|This article is featured in O'Dwyer's August '23 Financial PR/IR and Professional Services PR Magazine
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Not exactly what you had in mind. Or you’d be subject to the endless, “I think you said your credit card was stolen. Is that right?”
Maybe that’s why your eyes were rolling.
Thanks to advances in AI and machine learning, chatbots have become much more sophisticated. Modern chatbots use Natural Language Processing and Machine Learning algorithms to understand natural language and learn from previous interactions with customers. What’s NLP and how does it work? Let’s let AI tell us (from Bing search).
“NLP is a branch of AI that focuses on the interaction between computers and humans using natural language. NLP enables computers to understand, interpret and generate human language. It works by breaking down human language into its component parts such as words and phrases. It then uses algorithms to analyze these parts and understand their meaning in context. NLP can be used for a wide range of applications such as chatbots, sentiment analysis and machine translation.”
This process has enabled chatbots to provide personalized and efficient support while reducing costs for financial institutions. A great chatbot—along with a trusted financial institution—can revolutionize the ways that consumers and companies alike access and manage their finances. AI helps the financial industry streamline and optimize processes ranging from credit decisions to quantitative trading and financial risk management.
JP Morgan Chase, for example, has been using machine learning algorithms to analyze legal documents, reducing the time it takes to review them by 360,000 hours per year. That’s 41 years of legal work! Goldman Sachs has been using machine learning algorithms to improve its trading strategies.
Consider some of the ways that fintech company Stripe is using AI in addition to more Stripe data: 75 percent of leading generative AI companies—including OpenAI, Runway, Diagram and Moonbeam—have signed up with Stripe to go to market quickly, scale with compliance and bring their products to more users worldwide.
AI has also significantly boosted fintech by enhancing security; it has the ability to comb through large amounts of data and find potential security threats. Banks can protect their customers from fraud and reduce operational costs.
Another aspect of AI’s effect on the financial industry: personalization. This is a top priority for financial institutions as it can reduce acquisition costs by as much as 50 percent, lift revenues by 5 to 15 percent, and increase the efficiency of marketing spend by 10 to 30 percent (McKinsey). A Capco study found that 72 percent of customers now rate personalization as “highly important” in today’s financial services landscape.
Think about the way that Amazon suggests purchases for you that make perfect sense based on past purchases and your browsing behavior. These same principles can be applied to financial products. Maybe you’re thinking about retiring and you’re intimidated by the sheer number of decisions you have to make in order to do so. Maybe you’re expecting a child and you’re thinking about education costs down the road. Providing you with options for financial products takes some of the burden off of your research and can often be an opportunity for an easy sale. It’s all about making the experience easy, comfortable and intuitive.
Here’s an excerpt, published in November ’22, from the Genesys report “The Challenge of Customer-Centric Banking”:
“61 percent of banking executives say expectations for customer experience are continuing to rise, and nearly half (45 percent) admit they are struggling to keep up. But in today’s experience economy, banks can’t risk missing those expectations. From attracting and retaining both customers and employees to increasing brand reputation, to meeting financial goals, banks getting customer experience right are outpacing their competitors, proving that when it comes to people and business results, experience matters.”
Where do PR practitioners fit into this? AI is here to stay; we’ve all heard the broad range of arguments being made about AI, from the benefits—savings, efficiencies, freeing resources up for more important projects—to how it will potentially destroy mankind. PR professionals have a responsibility to understand how companies and clients are using or planning to use AI and find ways to communicate the benefits to all stakeholders, from consumers to trade audiences to employees and shareholders. Like all other aspects of fintech, you can’t communicate features, benefits and the why unless you get it. We need to be the AI thought leaders—not the chatbots—and lead the way.
Henry Feintuch is President of Feintuch Communications, Treasurer of the PR World Alliance and past President of PRSA-NY.