Source: COGNITIVE WORLD on FORBES

For many years banks have been at the forefront of using technology to help with both front-of-house and back-of-house operations. It’s no surprise then that banks are adopting AI to help in a variety of ways. Large banks especially are industry leaders adopting AI to stay ahead of the competition, provide greater customer service to customers, more relevant services and offerings, as well as helping transform many back-end processes. On a recent AI Today podcast Casey Royer from USAA, a large US bank serving the military community, shared his perspective on how the bank is adopting AI, how they’re using AI to broaden USAA banking offerings, make their operations more effective and efficient, and offer greater value to their growing customer base.

Using AI for Fraud Detection

Founded in 1922, USAA is a Texas-based Fortune 500 diversified financial services company offering to bank, investing, and insurance to people and families who serve, or served, in the United States military, with over 12.4 million members. As a result of their broad geographically distributed customer base and needs for in-person as well as online and mobile offerings, the company has invested deeply in advanced technologies and is frequently at the forefront of emerging technology. In fact, USAA was the first bank to bring mobile deposits to customers.

With such a large and distributed customer base, the bank needs to continue to innovate in order to best serve its customers. One way they are doing this is with AI to improve the products and offerings for their customer. Something unique to USAA is that they have no brick and mortar branches, which means a large percentage of the business happens in a digital setting. As a result, they need digital systems that can handle a variety of different things as well as provide a positive experience for each customer. The bank sees AI as one way to help provide more hyperpersonalized offerings, automatic monitoring, as well as improve various back-office operations.

It’s no surprise the first place USAA decided to invest in AI was with monitoring fraud and fraud prevention. This was a big goal for the bank because it was one of the primary security concerns when it comes to doing a majority of your banking through a digital medium, and this is especially true with the variety of offerings and services that USAA offers. Right now they are using AI to look at and analyze how their customers are using their apps, where it's being used, and typical behaviors that the customers display when interacting with the apps to be able to analyze patterns and detect any potential anomalies and possible fraud taking place.

Through these fraud prevention methods, Casey says the bank is able to actively monitor fraud in real-time and is saving its customers on average around $100 million a year simply through these enhanced fraud prevention methods. This added layer of protection is another way that they can provide great service to their customers. This is probably the most pressing and most influential aspect of the use of AI in their company, but Casey notes that they try to look for other ways that AI can be utilized to improve the customer experience.

Investing in Natural Language Processing (NLP) Technologies

Another way that they're looking to improve the customer and banking experience is by enhancing online conversations with intelligent means. That means looking at language patterns in recognition and working towards developing a conversational AI model that can interact with the customers and help them to reach their financial goals in that way as well. USAA is very focused on providing operational conversational models for their customers to be able to use.

Currently, many large banks such as Bank of America, Capital One, and others have AI-enabled chatbots to help their customers with a variety of tasks. Chatbots are able to engage and interact with customers 24/7 breaking down the idea of traditional banking hours. When serving members all over the world, this is very important. Customers are becoming increasingly comfortable conversing with chatbots for a variety of things making this a logical next step for the bank to invest in. 

This also has led them into figuring out how they can customize and personalize the online experience for each customer. The hyperpersonlization pattern of AI is where you treat each individual as an individual, not as a member of some grouping or bucketing into a broad category or classification. Use cases include personalized content, personalized advice or guidance, behavior profiling, recommendation systems, and other ways of bringing information and data together specifically for the benefit of an individual. AI is now starting to allow the bank to provide more personalized insurance offerings depending on where customers live, know if they will be coming back from deployment soon, and offering various services to help them transition home, and other personal offerings. Without AI, this just can’t be achieved at scale. The bank still has a ways to go before true hyper-personalization is achieved, but internal discussions continue about the best path forward.

Challenges to Transformative Tech

Implementing transformation technology, including AI, is not always easy. You need to make sure you have the right team in place and expertise in-house, as well as access to data, clean data, money and resources to invest in the project, and parties that are willing to adopt the technology once created. Casey discusses some of the struggles and challenges of implementing AI throughout USAA and their digital offerings. One major challenge they have faced is access to data. It’s no surprise that USAA has very large amounts of data, but one of the big challenges is having real-time access to that data to see what is happening. Additionally, this has led to challenges with training data. If the data is there but hard to access, it can make it challenging to update or improve the AI models if the team doesn't have accurate information to use and learn from. This challenge of data access is not unique to USAA. In fact, many companies struggle with similar challenges, and with recent data breaches, this challenge only intensifies. USAA has learned that they have been more successful when they have a centralized area of machine learning with multiple setups that focus on specific tasks or sets of data.

Another major challenge has been the actual implementation of AI. One of the biggest challenges is internal buy-in as well as ROI. People fear being replaced by AI and losing their jobs. In order to make the transition to the adoption of AI technology more smooth, starting with an augmented intelligence approach can be powerful. USAA has been able to witness this first hand. One of the major areas that an augmented intelligence approach has made a positive impact is in their customer service department. By using AI to help handle certain tasks it frees up call center agents to focus on higher-value tasks with customers. USAA customers expect a high level of customer service from this institution, and at this time, they don't want to fully automate their customer service experience with straight AI. However, by adopting an augmented intelligence approach call center agents are able to handle higher value calls that require human interaction. 

At the end of the day, it’s important to make sure companies strike a good balance between keeping costs low for their members but still allow the company to move forward with the adoption of various AI technologies to improve and provide excellent customer service and excellent customer products for their members. The adoption of AI in banking is continuing to transform companies in the industry, provide greater levels of value and more personalized experiences to their customers, reduce risks and increase opportunities involved in being the financial engines of our modern economy.

Kathleen Walch is Managing Partner & Principal Analyst at AI Focused Research and Advisory firm Cognilytica (http://cognilytica.com), a leading analyst firm focused on application and use of artificial intelligence (AI) in both the public and private sectors. She is also co-host of the popular AI Today podcast, a top AI related podcast that highlights various AI use cases for both the public and private sector as well as interviews guest experts on AI related topics.

Follow Kathleen on Twitter. Check out her website.