Navigating the AI Transformation Taking Place in the Financial Services Sector

The financial services sector is undergoing a transformative shift with the integration of artificial intelligence (AI), ushering in a new era of advanced automation, and increased operational agility.

According to International Data Corp. (IDC), global spending on artificial intelligence was expected to reach $166 billion in 2023 (with banking one of the largest contributors by industry at about 13%), rising to about $450 billion by 2027, highlighting its significance and priority within the industry. Other industry observers such as the International Monetary Fund, Deloitte, Harvard Business Review and McKinsey, are also bullish on the impact AI will have on the sector. 

The power of AI to disrupt industry dynamics is closely linked to its ability to address complex information challenges. Financial markets require real-time access to vast amounts of data and computing power for modeling, analysis, forecasting and risk assessments. Keeping this in mind, here are a few key considerations on how best to leverage AI to streamline workflows. 

Extend automation and data capture with AI capabilities 

Leveraging existing software capabilities such as intelligent document processing (IDP), robotic process automation (RPA), and content management being supported and augmented by AI-enabled capabilities is a good first step. These may appear to be disparate technologies but when acting as a single unified platform, complex workflows like account opening and loan processing can be automated. The idea here is to drive end-to-end automation that results in better operational efficiencies while improving customer experiences. 

Five areas where automation can be enhanced with AI

1) Delivering enhanced customer support: Winning and retaining customers in the financial sector necessitates a seamless and personalized approach. An AI-powered automation platform, encompassing IDP, RPA, workflow automation, and content management, optimizes critical workflows like account opening and loan processing. Automation enables financial institutions to deliver a swift, efficient, and personalized customer experience while providing a unified view of the entire customer journey. This real-time visibility allows for prompt actions to enhance experiences and drive positive business outcomes, increasing engagement, conversion, and revenue through improved interactions.

Take Tradition Capital Bank, as an example. Shifting from paper to digital systems within a week, they now process loan documents six times faster in their current environment. This yields valuable insights into customer behavior and interactions, simplifying the understanding of customer needs and preferences for tailored solutions. By leveraging AI to automate tasks in this way, the workforce is freed up to address more complex customer issues, resulting in differentiated customer experiences and improved satisfaction levels.

2) Streamlining customer onboarding: Traditional onboarding processes in financial institutions are often complex, time consuming, and error prone. Automating data entry, document verification, and risk assessment can simplify these processes. AI-enabled data extraction provides insights on one platform, allowing organizations to accelerate onboarding with faster, informed decision-making. 

Additionally, these capabilities extract valuable business intelligence from unstructured information in text-based documents and through data gathering across various digital channels like web, chat, email and even social media. This significantly reduces the time and resources needed to analyze text-based interactions.

3) Automating workflows: The financial sector is known for managing large volumes of documentation. Tools like intelligent document understanding enable institutions to automate data classification and accurately extract meaningful information from any document type, reducing staff workload, enhancing data accuracy, and minimizing processing time and costs.

AI is also playing a big role in extending automation capabilities through advanced technologies like IDP and RPA. For instance, IDP automates data extraction from various documents, such as invoices and contracts, streamlining tasks like account opening and compliance checks. Further, RPA handles repetitive tasks, reducing errors and expediting routine processes. In this way AI contributes to automating financial workflows, improving decision-making and overall efficiency in the industry.

4) Digitizing document retrieval: Time is money in the financial sector, and quick access to information is crucial. While digitizing documents has been a practice for years, advancements in AI now allow for scalable solutions to address intricate paper-based workflows. With AI-powered intelligent document processing (IDP), employees can seamlessly retrieve documents from any business application, streamlining access and boosting productivity. By integrating AI solutions, financial institutions can markedly enhance the speed and precision of document retrieval, facilitating quicker and more informed decision-making processes.

5) Maintaining security standards and supporting regulatory compliance: The financial sector is heavily regulated, and non-compliance can lead to severe consequences. Intelligent automation aligns business operations with regulatory norms, providing transparency in compliance auditing and reporting. This facilitates efficient management of compliance risks and regulatory affairs, allowing financial institutions to maintain a consistent and compliant infrastructure.

Financial institutions empowered by AI

As financial institutions look to leverage AI and automation as a catalyst to their digital transformation, real-world examples showcase the tangible benefits of integrating intelligent automation into a workflow process. 

Vantage Bank Texas leveraged cloud-based solutions to enhance document-related workflows, leading to significant improvements in storage and retrieval functionality. This transformation boosted operational efficiency and streamlined customer onboarding experiences, highlighting AI’s capacity to reshape traditional banking practices into agile, customer-focused frameworks. 

Similarly, Lake Elmo Bank harnessed the power of AI-enabled IDP to streamline access to sensitive customer information and supporting documents across multiple branches and departments. With the capability to capture, categorize, and index up to 60,000 documents monthly, the bank saved hundreds of employee hours and transformed customer interactions by providing instant access to information, elevating customer service standards. 

“We are now able to provide customer service that is second to none,” says Kathy Jeanson, assistant VP and operations manager at Lake Elmo Bank. “We can quickly access information and no longer have to put customers on hold or call them back. Having access to the information in seconds versus needing to dig through files and boxes is a big time savings.”

These are just a few success stories that underscore how AI is poised to disrupt the financial services industry. This ability to extract and analyze vast amounts of data from documentation in real-time, augment decision-making processes, and automate mundane tasks not only promises to streamline operations and bolster efficiency but also heralds a new era of innovative financial solutions. As AI continues to evolve, its transformative impact on the financial landscape will only escalate and is poised to shape the industry in ways that were once unimaginable.   

Bart Peluso is Vice President, Marketing at KnowledgeLake.