11/19/2024
As seen on VettaFi: Advisor Perspectives, originally published October 2024.
The integration of artificial intelligence (AI) within financial institutions is no longer the future; it’s the present reality rapidly transforming the industry. In an extremely competitive landscape, AI offers banks new opportunities for efficiency and innovation. Across the global banking sector, AI could add between $200 billion and $340 billion in value annually, or 2.8 to 4.7 percent of total industry revenues, largely through increased productivity.
Over 50 percent of financial institutions are using AI to optimize investment decisions. As AI adoption continues to grow, institutions must strategically navigate implementation. To achieve this, it’s imperative that banks have a plan in place to address the impact on both their employee and customer experiences. Neglecting either will lead to imbalances that will diminish AI’s capabilities.
Prioritizing the workforce experience
Employee satisfaction is critical for any institution’s success, especially in the midst of organizational transformation. Without proper change management techniques in place, AI integration can potentially disrupt employees’ roles and workflow. Therefore, prioritizing workforce experience involves several strategic initiatives to ensure employees are not only prepared for these changes, but also feel valued and supported during AI implementation.
Since AI automates routine tasks, it’s crucial for financial institutions to invest in reskilling programs. A reskilling program introduced in tandem with AI allows employees to learn new skills or improve existing ones that complement AI’s efficiencies. For example, employees can be trained in data analysis, AI oversight and when to utilize AI in their day-to-day role. When an institution provides this training, the workforce will learn to work in tandem with new technology, maintaining a smooth transition and reinforcing job security.
Another vital element in prioritizing the workforce experience is transparent communication from the institution. The institution should be upfront and clear about AI’s role, the reason for implementation and how it will impact employees’ daily tasks. It is crucial to reinforce that AI will not diminish their importance. In fact, the technology will add value by simplifying tasks so they can focus on more complex work. Once employees understand the benefits and objectives of AI implementation, they’re much more likely to embrace the new technology. This transparency also involves being honest about the potential challenges and how the workforce can address them proactively, fostering trust and collaboration between leadership and staff.
Additionally, involving employees in the AI implementation process can significantly enhance their experience and acceptance of the new technology. This can be achieved by creating cross-functional teams that include employees from various departments and levels of the organization. This allows the employees who participate in the implementation process to feel a sense of ownership and contribution to the success of AI.
Prioritizing the customer experience
The financial services landscape is increasingly competitive, meaning institutions must emphasize the customer experience more than ever before. With numerous banking options available, customers are going to choose and be loyal to institutions that provide personalized and efficient services. AI offers significant opportunities to enhance customer interactions, but it must be implemented successfully for customers to actually discern its benefits.
One of the most noticeable advantages of AI to the customer is its ability to personalize customer interactions. AI can analyze customer data to provide insights into the individual’s preferences, spending habits and financial goals. AI can also be used to offer customers personalized product recommendations, tailored financial advice and customized marketing messages. For example, AI-driven chatbots can use customer data to provide relevant information and services, making interactions more meaningful and efficient. Personalized interactions not only enhance customer satisfaction but also create a more engaging and germane experience.
AI can also enable financial institutions to enhance customer service by utilizing predictive analytics. This allows AI to identify potential issues before they escalate, allowing institutions to address them proactively. For instance, AI can detect unusual account activity and alert customers to potential fraud, providing peace of mind and building trust. Additionally, AI can anticipate customer needs based on their past behavior and offer solutions before they even realize they need them. This proactive, problem-solving approach heightens the customer experience by making the customer feel the institution is attentive to their needs.
