Banks and artificial intelligence, opportunities… and threats?!

6 min read

For several months, the media has regularly made reference to banks taking revolutionary steps by adopting artificial intelligence technologies. These are of course related to customers but they also concern internal activities, such as trading, and they are becoming pillars of the banking sector’s transformation. However, the opportunity presented by AI is proportional to a reshuffling of the cards and subsequent upheaval in habits.

AI has landed at Orange and Crédit Mutuel

Make no mistake, artificial intelligence is no longer science fiction stuff. Indeed, 2017 marks a significant turning point when it comes to adopting large scale technology. Several banks have already taken the plunge, such as the Royal Bank of Scotland or the Singaporean DBS Bank. In France, two establishments have already made the transition this year. Orange’s first mobile banking system, simply called Orange Bank, and Crédit Mutuel have both opted for IBM’s Watson platform.

The cooperative bank’s project involves assisting 20,000 employees in charge of clientele in 5,000 branches, thus reaching an almost unprecedented scale. In practical terms, the American giant’s artificial intelligence will become a virtual assistant for consultants. The aim? Limiting themselves to repetitive tasks to accelerate processing time, for example handling the 350,000 emails that consultants receive a day. Crédit Mutuel is prioritising development in order to increase the bank’s revenue. From a technology perspective, Watson is simply an extension of task automation, implemented via web and mobile applications, particularly over the last few years.

The arrival of this «super assistant» has naturally caused quite a stir among trade unions and employees, who are quite simply concerned that it will eventually replace them. However, the concern is lower at Orange Bank where Watson has a completely different use. In concrete terms, the technology will be used as a digital assistant, this time for their customers. In a way, it replaces banking advisers at bank branches. «It is an avant-garde technology”, explained Stephane Richard, Orange CEO, who also specified that «it teaches us to get to know you.» Customers will be able to ask questions using natural language such as «what is my card limit?» followed by «increase it by 500 euros». Eventually, Watson will also be able to offer services according to your needs over time, such as life insurance and other common banking services. However, the strength of the concept lies in the processing and analysis of customer data: artificial intelligence is capable of offering a service at the right time for you.

 

The dark side of artificial intelligence

There is nothing very surprising about the arrival of these «natural language» interfaces that work in collaboration with or provide assistance to banks, per se. In fact, they are being developed almost everywhere, on various websites and an increasing number of wired speakers, such as Amazon’s Echo, Google’s Home, or, more recently, Apple’s HomePod. Indeed, the development of natural language has been a priority over these last years but this is just the beginning. The aim of these artificial intelligences is primarily to become proactive over time, as well as processing huge volumes of data almost in real time. MIKA is one of the first demonstrations of this technology. It is Nokia’s vocal assistant and its objective is to help telecommunications operator’s access critical information quickly.

The banking sector has naturally seen its potential for several years: artificial intelligence that is so «knowledgeable» that it could anticipate events and even make predictions (based on previous knowledge). Thus, it is the start of systems that are able to predict market movements, detect promising start-ups or even manage the portfolios of wealthy clients. And they even go beyond these tasks and analyse current affairs and social media, for example, in order to provide a «portrait» of a given market. As it happens, the Amareos start-up from Hong Kong is able to mix millions of articles and reactions on the Internet by coupling them with the fluctuation of certain market indices or currencies and in several countries at that! Indeed, it has become an expert at analysing emotions. «Our indicators register fear, joy or anger and are capable of providing an overview of the psychological state noted on global financial markets. They can also show what investors think of a certain country at a given time» and thus anticipate financial movements, explains Philippe El-Asmar, Amareos co-founder. The Hong Kong company has partnered with start-up evaluation specialist, Oddup, in order to provide Thomson Reuters Eikon, financial analysis expert, with an ultra-precise analysis tool.

Investment funds are also getting on board

Jean-Gabriel Ganascia, philosopher and professor at the Pierre and Marie Curie University, explains that «investors use artificial intelligence in two ways: to anticipate the decisions of other investors and to anticipate risks that are taken when value investing.» Banks already use high-frequency trading to place mass orders over very short periods of time. Traders are currently lacking the ability to define both precise and reliable sources and automation capacity. This technological leap forward over the last few years has extended far beyond just banks. All of these IT functions have got investment funds thinking and have led them to take a close interest in these technologies. Parisian start-up, Walnut Algorithms aims to reinvent currently used software that only relies on known strategies, by exploiting the technologies’ ability to detect new markets. It is working on «deep learning» and «machine learning» technologies that allow it to adapt to the conditions of the financial markets in real time, in concrete terms. This is a magic bullet for investment funds as, on one hand, it could increase their average performance and, on the other hand, reduce volatility, that is to say, the scope of the variations in the price of a financial asset.

Artificial intelligence is no longer a prospective topic but rather a reality that has already begun to make its mark on the world of finance and banking. Should we be afraid of it? This recurring question can only be answered by putting it to the test. However, the key to success most likely lies in finding a balance between humans and technology.

 

For its 2017 edition, TRUSTECH, a global event dedicated to solutions for secure payment, identification and connections, will host a programme of high-level conferences that include a session in AI.

Visit www.trustech-event.com for more information and to register


Claire de Longeaux – TRUSTECH director

For almost 20 years Claire has been responsible for developing international trade shows. After a first experience at the Nürnberg Messe (Nuremberg Exhibition Center – Germany), Claire was Exhibitors Manager for the international development of JEC Composites Show (The leading exhibition for Composites). ). Since 2014, within the Industries and Digital Group of Comexposium, she has been supporting the development of events related to IT security, including TechnoSecurity Investigation and Forensics Conference – conference dedicated to cybersecurity in the US. She has been the TRUSTECH Event Director since 2014.

 

About Claire de Longeaux

For almost 20 years Claire has been responsible for developing international trade shows. After a first experience at the Nürnberg Messe (Nuremberg Exhibition Center – Germany), Claire was Exhibitors Manager for the international development of JEC Composites Show (The leading exhibition for Composites). ). Since 2014, within the Industries and Digital Group of Comexposium, she has been supporting the development of events related to IT security, including TechnoSecurity Investigation and Forensics Conference – conference dedicated to cybersecurity in the US. She has been the TRUSTECH Event Director since 2014.