We are all familiar with Artificial
Intelligence (AI), even if most of us might not be able to explain it. In simple terms, AI is computer-generated technology
that simulates human
intelligence. It is the basis for two perennially cheerful characters that many
of us speak to every day: Apple’s intelligent assistant Siri and Amazon’s
virtual helper Alexa. AI is also the brain behind millions
of recommendations on Netflix and Amazon. It powers self-driving cars and makes
impressively accurate Fantasy Football predictions.
Given the sheer utility and ubiquity
of AI, it’s no surprise that companies across all industries are willing to
spend to get in on the game. Global spending on AI-related technologies is set to grow from $1.5
billion in 2017 to $2.8 billion in 2021.
With these innovative
technologies in mind, is your board ready to work with management to lay the
best roadmap to success for your company? Let’s turn first to some examples of
how companies are putting AI to work now.
How AI Is Being Used Today
In financial services, AI is already being
used to speed up the process of opening a bank account by extracting
information from images and documents that the customer can submit through a
mobile app. This reduces the on-boarding process to minutes instead of hours
and helps grow the bank’s customer base since, according to a recent study, 38
percent of customers will abandon the account opening process if it takes too
AI is also being used to help nudge
customers to improve their financial lives and save more money. Consider the
fact that 40 percent of American
households don’t have enough savings to cover $400 in emergency expenses.
Similar to how your Nest thermostat learns your preferences of temperature
control, personal wealth planning applications learn your spending patterns,
risk profile, and investment preferences, and suggest ways to change your
behavior to increase savings.
In addition to improving the customer experience, banks are looking to AI to help improve the bottom line. More than 60 percent of participants in a recent NACD webinar said they would invest in AI for increased efficiency and productivity in their operations. AI’s ability to eliminate errors, improve customer service, and automate processes can exceed 80 percent in specific scenarios, so it is not surprising that AI is becoming a central strategic theme in many organizations.
It’s likely we’ve only seen the tip of the
iceberg in terms of AI applications within the financial services industry, let
alone many others. There is already talk of using AI in the loans space to
review documents in place of lawyers, and to make better decisions about borrowers
when market data is scarce.
Starting the AI Conversation
But I know there are lingering worries
about AI emerging in conversations in boardrooms worldwide. Every quarter there
seems to be a new technology that promises to address all of yesterday’s
problems. While there are certainly many success stories and examples of
improvements from AI, there are also implications to a company’s strategy, operations,
and culture. For example, concerns about the potential impact on the company
culture and employees present a real risk.
But so are the risks of not embracing
AI, since there’s little doubt your competitors will. To move forward with a
smart AI strategy, here are some questions that can help your board define the
company’s AI goals:
What problems are we trying to solve with AI? What metrics and milestones are we using to define success?Is our existing technology ready to support AI initiatives?Does our AI budget match our strategic goals? What are our competitors doing that we can replicate and improve?
And the central theme of all of these
questions should be: How is this ultimately helping our customers? AI
technology can facilitate quantum jumps in the ease of doing business, the
accuracy and timeliness of services, and data delivered, but the focus should
be on the customer’s needs first.
Building Your AI Strategy
Best practices in this space have deep
roots in other management theories, but have evolved to reflect recent successes
at enterprises across industries as companies explore the possibilities of AI.
A winning strategy boils down to customer-focused design, data preparation, a
prototyping plan, and buy-in from your employees.
Design. When management works to design the strategy, they should avoid asking
clients about features and functions. Instead, the board should direct the
strategy team to focus on clients’ problems. New technologies allow product
design to reimagine a customer’s experience across the end-to-end lifecycle. With
this comes the question of how the company is capturing client feedback on
their experiences with your products and services and how that feedback is taken.Preparedness. Any move to incorporate AI into your business strategy should start
with an assessment of the current situation. Much of technology modernization
comes down to the state of the company’s data. Not all processes will benefit
from AI. But where there is potential for AI solutions, features such as
real-time processing, high-availability, scalability, and cost efficiency
matter. Being able to provide data visualization, analytics, predictive
analytics, and machine learning will all be dependent on the state of the
company’s applications and their associated data. Directors should ask for
benchmarks on data quality when assessing AI’s role in strategy. Experiments. The phrase “fail fast” is frequently used in today’s agile design and
programming methodology. Another way to consider this approach is “learn
quickly.” Boards should encourage management to engender a culture that prototypes,
observes, gets client feedback, and adjusts accordingly. At Broadridge, we frequently
use pilot programs to quickly assess the viability of new ideas. Determining
how to implement ideas quickly and inexpensively with the understanding that
some will not work is essential to building an organization and culture aligned
with the reorientation to new technologies.Personnel. Perhaps the most important reason to have a clear AI roadmap is to
communicate it to the company’s existing personnel. Employees want to be
inspired by the firms they work for. They want to understand the vision. And
they don’t enjoy repetitive jobs. What many firms lose sight of is that in any
transformation, when there are new tools for the job, training the existing experts
to use them is often the best solution. The board should ask management what
their plan is for rolling out the new technology and how it will navigate
questions and concerns from personnel.
Directors shouldn’t doubt the utility of AI and that it has a role to play. The technology of today has the potential to transform our clients’ experiences, leveraging our subject matter experts as we increasingly connect the dots to consider the end-to-end client lifecycle. But these opportunities are not without risk, and nirvana is rarely reached without discussions about the roads to take along the journey. It’s worth having these conversations today if we wish to harness the power of AI tomorrow.
Interested in hearing more from Broadridge’s Michael Tae on AI? Listen to a recent NACD webinar about the reality of AI here.