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Created on 12.06.2019

Artificial intelligence in the financial sector – from chatbots to robo advisory

Digitization will have a lasting impact on society. It ensures progress and changes not just processes and business models, but also our behaviour. Digitization and the new technologies associated with it are also omnipresent in the financial sector. Artificial intelligence has the potential to revolutionize the world of finance. This also benefits investors.

Technological progress will radically change our world over the coming years  – this also applies to the financial sector. The major driving forces, such as Blockchain, also include artificial intelligence (AI), machine learning and the automation of working processes. The aim is to make machines work in such a way that they emulate the decision-making structures of people as closely as possible – or even improve on them. They will ensure that financial companies not only work differently in future, but also provide customers with different services. With the arrival of fintechs over recent years, an entire sector has emerged that focuses on developing intelligent solutions for the financial industry. Some of these solutions and systems are already in use.

Chatbots – customer contact persons available around the clock

Customers are increasingly making initial contact with companies via chatbots, for example. These ‘digital assistants’ based on artificial intelligence are used to answer simple customer queries, for instance. PostFinance’s digital assistant helps customers to find their way around It’s available around the clock. If it’s unable to help further, the chatbot transfers customers to the customer service department. With the progressive deployment of artificial intelligence, chatbots will not only be able to respond to queries in future, but also to analyse them. Chatbots will develop from reactive robots into personalized assistants and will serve, for example, as a replacement for written FAQs or will support the customer service department. Chatbots are also valuable tools for companies operating in a wide range of sectors when it come to providing services.

Robo advisors: digital asset managers

Robo advisors, which are already being used by some banks and financial institutions, go a step further. They act as digital asset managers, investing capital on an automated basis according to a defined investment strategy. This can be advantageous for investors, as they benefit from attractively priced asset management. An investor’s risk profile is determined and products compatible with the profile are evaluated based on a digital questionnaire.

Once the money has been invested, the robo advisor manages the portfolio independently and ensures that the investment strategy implemented is always in line with the investor profile entered by the customer. In contrast to human asset management, emotions play no part with robo advisors – they do not make irrational decisions and cannot be subconsciously led by emotions.

For complex customer requirements, for example, in relation to markets, asset classes and risks, a combination of automated services and personal consultation seems to represent a possible solution for the moment. This kind of ‘hybrid consulting’ combines the benefits of digital solutions with the experience and knowledge of a human advisor. The portfolio management software also lays the foundation for the automation of the investment processes, order management and transaction processing.

AI solutions make business processes more efficient

Artificial intelligence in the financial sector does not just mean new forms of interaction or services for end customers. Machine learning and AI systems make business processes more efficient. They analyse procedures and developments and automate entire processes. Machine learning can help financial institutions to detect and prevent economic crime, such as money laundering. This is done by programmed, intelligent systems that analyse documents and processes for anomalies. The intelligent, digital systems deployed are constantly learning, ensuring their continual improvement.

Artificial intelligent is not a futuristic dream, but is instead already being used in the world of finance today. Banks use systems that cleverly combine the benefits of machine learning, data mining and pattern recognition to optimize their processes and provide customers with individual investment solutions. The potential of artificial intelligence is far from exhausted though. The technology is still in the embryonic stage of its development. Over the coming years, we will see huge growth in specific applications that will profoundly change the way in which banks and their customers interact and will permanently alter customer relationships. The outlook remains exciting.

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