Why is AI taking so long?
Established Banks have two strong competitive advantages that new entrants to the industry typically do not have: trust and a balance sheet. Those with long histories and robust capital are able to withstand huge economic shocks, and have done so successfully over multiple crises.
However, when it comes to technology, they are behind. Banks have been talking about innovation for years, with Executives clear that their competitive position will only be maintained by delivering world-class technology alongside excellent client service. The winners in the industry will be those that can transition towards being technology companies with balance sheets, while maintaining that hard-earned trust with their clients.
The reality is complicated. Legacy systems, robust (but long) processes and growing regulatory requirements. In Europe, on-boarding times are actually increasing for new corporate clients, which has a knock-on effect on client experience and ultimately missed revenue opportunities elsewhere. The critical data is not easily accessible, often scattered across Excel spreadsheets or dated internal technologies. Banks are changing this, but it will take some time to make the most of cloud technology and smart stores of data.
A lot of these problems can be solved by clever use of straightforward technology, rather than artificial intelligence or blockchain. Indeed, Banks are taking big steps to refine their client-facing technology by doing exactly that. But the power of AI-driven technology is quickly becoming apparent, for those that are able to implement it. The more Banks are able to understand appropriate use-cases and lead effective implementation, the quicker they will realise the competitive advantages of game-changing technology. Banks today have to move faster than they ever have and AI will be a core component of growth strategies.
Unfortunately, it’s difficult for large organisations to find the right AI talent. There is a known issue with hiring AI experts, with a recent survey finding that 93% of UK and US organisations are committed to AI, but agree that a skill shortage poses a considerable challenge. More than half of IT decision-makers agree that they do not have the right in-house talent to make the most of AI-driven technologies. In a 2018 study about global AI talent, it was estimated that there are just c.3,000 PhD-educated researchers globally looking for work. In world where industries are rapidly changing, this is a small talent pool.
If Banks are able to leverage academic research, they will realise the power of this advanced technology and its potential to drive a revolution in the industry. Implemented properly, it will reduce processes that take months down to seconds and support a people-first approach to Financial Services. Improved analysis, lower loss rates, better client coverage and improved service. Banks aren’t going away — they’ve been a critical part of our economies for hundreds of years and will be here for many more.
At Scribe, we’re taking a research-led approach to artificial intelligence, bringing cutting edge technology into the industry and removing the friction of analysing corporates that you lend to. We see the huge potential of this technology and are working alongside Banks to deliver real, tangible AI-driven solutions.
