Banks need to address a cultural shift in order to make the best use of artificial intelligence (AI), according to Samik Chandarana, head data and analytics, applied AI and machine learning, JP Morgan.
“There’s a cultural shift in the way people implement this technology. And quite frankly us banks weren’t so good at that,” said Chandarana, speaking on a panel at Money 2020 in Las Vegas. “Things like robotic process automation – basically putting bad robots on bad processes and taking everything as an individual portion of the problem.
“Now it’s the whole design experience of taking it from front to back – how can I create an AI-powered firm? And that’s going to take a long time to get that through to the way we work. This is all part of the training we’re doing at firms trying to make people more data aware,” he said.
Daragh Morrissey, director of AI at Microsoft WW Financial Services agreed that the cultural shift would need to occur, and it could take time.
“It’s a massive cultural journey that banks are going to have to go on to be successful with AI,” he said. “According to Gartner, around 90 percent of projects that don’t move out of proof of concept to production. You need perfect alignment between the data teams, the IT teams and you need executive sponsorship driving that through.”
According to research by Nasdaq, JP Morgan’s tech budget last year was $10.8bn, with nearly half of that set aside for new investments. According to recently published research by Emerj, customer service is the foremost internal use case for AI among banks, with risk management, fraud and cyber security, and business process management (BPM) following closely behind. Most banking AI vendors are based in the US (46), followed by England (13), France (four) and India (three).
But banks do not budget for innovation, according to Morrissey – instead “they spend a lot of money keeping the lights on and compliance”.
“That leaves a very small portion for innovation” he said. “Some banks starting out on this journey need to think very carefully about how they demonstrate the value of this technology. One of the things I suggest to banks is to start with the business problem and work back to the technology. Some people are using AI as a missile to kill a mosquito – which is why some of these banks are staring out [with AI] on financial crime, because it’s an easier business case to tackle.”
For Chandarana, a new mindset is required.
“Banks and other financial services haven’t really been spending R&D money. What they’ve spent money on before is developing new products for customers,” he said. “Now we need to move our thinking along to allow some people within the firm to dream a little. What can technology actually do for us?”