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AI’s Big Potential in Financial Services Up Against Major Adoption Hurdles Featured

Artificial Intelligence is being underutilized in the financial services sector. And, when it is being deployed, it is falling short of meeting customer expectations, according to a report from the Capgemini Research Institute.

The report, “Smart Money: How to drive AI at scale to transform the financial services customer experience,” identified COVID-19 as a catalyzing force for AI adoption in the financial services space. However, due to integration challenges and customer perception, the emerging technology’s potential is being undermined.

“Financial services firms have much to gain from implementing AI in their customer interactions, and they have an opportunity to embrace AI to reimagine the customer experience journey, but there are steps to be taken before the benefits are fully realized for businesses and consumers alike,” said Anirban Bose, CEO of Capgemini’s Financial Services and Group Executive Board member.

REPORT HIGHLIGHTS

  • More than half of all customers said they have daily AI-enabled interactions with their insurance firms or banks
  • Most customers (78%) expect to “increase touchless interactions as the COVID-19 crisis prolongs”
  • Financial services have enjoyed operating cost reductions at a 13% rate and increased revenue per customer at a 10% rate

According to the report, the deployment of AI as a means to improve the customer experience has risen substantially in recent years. As such, 94% of organizations said improving customer experience is a key motivating force behind launching new “AI-enabled initiatives.”

The problem, though, is that there is a “clear disconnect” between customer expectation and reality. Nearly half of those asked said the value they derived from engaging with AI-enabled digital “touchpoints” is either non-existent or was below expectations. Further, customers reported increasingly looking for more of a human experience during these interactions. To that end, 35% said current interactions lacked a “human touch.”

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Singapore WinnersDespite widespread belief that banks and insurers can realize organizational benefits from utilizing AI-based customer engagement, only 6% of insurers and 5% of banks have been able to successfully deploy it at scale. Organizational resistance, fear of job loss and long gestational periods of implementation, among others, have proven to be substantial barriers to adoption, notes the report.

 “Organizations need to focus on educating their customers and staff on what AI can do for them. It will take both investment and consumer trust to make the most of this powerful technology. To deliver the right AI-powered experience centered around the consumer, banking and insurance firms must ensure they have senior leadership roles in charge of internal and external AI adoption and acceleration,” added Bose.

The economic impact of the artificial intelligence will, ultimately, be much greater than just the savings associated with its adoption. In a separate study from Brand Essence Research, the AI Hardware Market is expected to grow at a compound annual growth rate of 37.5% between 2020 and 2027. Last year, that industry weighed in at $9.8 billion, notes Brand Essence.

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