In a conversation with business bankers’ association SME Banking Club, Strands’ CEO Erik Brieva addresses the demand for personalized AI-based banking solutions, the urge to transform the customer experience (CX) in banking, and how needs of SME customers have largely been ignored by financial institutions.
The following are the key highlights of Erik Brieva’s chat with SME Banking Club’s CEE Manager Olena Gryniuk. Check out the full interview here: https://smebanking.club/ai-in-banking/
1. How can banks make the most of AI technology?
There are four essential ingredient to achieve an AI strategy:
- Relevant Data: It is required to have access to a huge amount of customer data. Trillions of transactions and events happen every day in banking, most of them contain hidden patterns and relationships.
- Use Cases: Understand what are the needs, the desired results to cover those needs, and define the use cases of application.
- Appropriate Algorithms: Identify the appropriate algorithms to create the valid models for the desired use cases.
- People: Good IT team with the talent, experience, and the appropriate business mentality and corporate culture.
However, to make the most of AI technology, banks need to implement an AI platform that is integrated with their core and digital systems. I have seen many banks trying to develop artificial intelligence software and applications by themselves, mostly unsuccessfully. Even though these banks have direct access to a vast amount of data, identify the use cases, know the algorithms, and have put together a group of data engineers and data scientists, they haven’t come up with a solution that has a big impact on their business. This is why now banks, instead of trying to build their own AI technology, will plug-in an existing and proven platform that provides pre-configured rules and models, and out-of-the-box actionable insights that they can use right away for their existing banking applications and operations. These banks will then be able to develop new algorithms and enhance such a platform, to generate more insights and additional solutions.
2. Are the customers willing to deliver their data to be better served by banks? What would you comment on here?
While there are some concerns regarding privacy regulations, we now know that consumers are willing to share personal data in exchange for personalised offers, to avoid noise and improve their financial wellbeing. At the end of the day, consumers want to feel special, want to be alerted, advised and even amazed by their bank and by other service providers. They crave new experiences. True value comes from understanding what the customer needs and helping them achieve it by presenting them with personalized, actionable notifications and recommendation of next-best actions. Yet, many banks are still leaning on simple forms of personalization, and therefore failing to engage increasingly demanding and tech-savvy consumers.
3. Building awareness about data bias is often stated as a priority in many industries, yet many companies fail to set conditions for it, what are your thoughts on this matter?
Although deploying biased algorithms doesn’t necessarily entail a conscious intention to discriminate against specific groups, developers must act responsibly to ensure their software is as impartial as possible. The problem with this is that even the most carefully constructed algorithms only have real-world data to pull from. Data scientists define the questions and analyze the data, but the technology will compound the bias in its logic, rendering it dependent on the whims and imperfections of the world. It is crucial that management teams understand the dire consequences that unfair bias can have, both on their business and on society at large.
4. In Strands' Making it personal ebook, you stress on the AI application for personalization of customer approach. Can you give some examples of what can be used by banks in better servicing SME customers?
SMEs are the backbone of the global economy and represent one of the biggest potential sources of revenue for banks, yet they are typically offered banking solutions designed with the retail customer in mind. We have been working to provide banks with an integrated platform of digital cash management and commercial payment tools specifically designed to benefit their small-to-medium enterprise customer base. Strands’ Business Financial Management (BFM) solution helps the SMEs to better understand their finances, project their short-term cash flow, provide more liquidity to their business and engage on a different level with their customers. Our solution offers a comprehensive set of tools and insights to empower SME owners to achieve better and more efficient management of their cash flow and working capital needs, manage accounts payables, receivables, budgets and provisions.
Do you want to dive into the main challenges and opportunities financial institutions face when approaching an AI-driven digital transformation? Get your free copy of our brand new ebook Making It Personal: How AI is driving the banking revolution.