When it comes to technology, capital markets have always been one step ahead. For years, capital markets firms have been using tools like algorithmic trading, quantitative analysis and, more recently, robo-advice to cut costs and change how they do business. Now, artificial intelligence (AI)—capable of learning, often autonomously, over time—is making it possible to create value across the organization in entirely new ways.
Five ways to leverage AI
Capital markets innovators are beginning to use AI to automate more intelligently, enhance judgment, enhance interactions, create intelligent products and services, and enhance trust. Here’s how:
Intelligent automation takes robotic process automation (RPA) to the next level, making it possible to replicate increasingly complex processes, adapt to changes and exceptions, and improve performance over time—particularly in the back office. Instead of anticipating and programming responses for every possible scenario, AI can monitor humans in action, watch for patterns and learn how to respond.
Enhanced judgement uses AI to help employees make informed decisions, consider new strategies and ultimately provide better outcomes for you and your clients. A classic capital markets example is next-best-action decision making, where cognitive knowledge management systems produce timely insights that your financial advisors can use to anticipate client needs and make appropriate recommendations.
Enhanced interaction uses AI to automatically analyze client behaviors to facilitate hyper-personalization, and the curation and delivery of information in real time. Here, digital assistants are shifting the client experience from filling in forms and navigating online portals to human-style interactions with conversational interfaces.
Intelligent products use AI to enable new offerings—or try to make existing offerings profitable in new demographic or geographic markets. Robo-advice is a particularly good example of how a precursor technology has changed the calculation and made it financially feasible for firms to target and engage clients with smaller asset holdings.
Enhanced trust involves not only building trust in AI within your organization, but also building trust in your institution among industry players, regulators and clients outside your organization. In a highly regulated environment like capital markets, AI can be a cost-effective approach to governance that provides important insights.
The next wave of AI
As AI technology evolves, so too do the use cases. In the first wave of adoption, capital markets firms focused their efforts on compliance and security, using AI to enhance fraud detection and boost cyber security. In the second wave, attention shifted to client service, in the form of next-best-action and next-best-offer decision making. Going forward, I anticipate growing interest in risk management stress testing, algorithmic trading and conversational user interfaces.
The case for AI in capital markets is clear and growing, but you have to know where to look—and be ready to act on what you find. To learn how your organization can build a foundation where AI will thrive, read our latest paper: Show Me the Value: The Case for AI in Capital Markets or get in touch with me directly at firstname.lastname@example.org.