In early March, Earnix hosted an executive breakfast in New York for consumer banking executives who work with analytics related to offer management and pricing. Two speakers presented their views on the state of analytics in financial services. One provided a long-term vision of using Artificial Intelligence (AI), and the other, offered down-to-earth practices of using current day technology to improve customer acceptance and profitability.
Our first speaker was David Teten, Partner at ff Venture Capital, which is a top-performing technology-focused venture capital firm based in New York City. His presentation began with the provocative quote from the Matrix, “Never send a human to do a machine’s job” as a way to introduce the topic of AI.
David described the three levels of AI: “weak AI” which is being used today to accomplish routine tasks that can be easily automated; “applied AI” which is used in deep learning models for narrow applications such as facial recognition or autonomous vehicles; and “general AI” which is true intelligence that is not limited to a narrow field, but where humans still must impose certain rules before it can “learn”. A great example of just how diverse the applications are is the story David shared of how AI is helping Japanese cucumber farmers to sort cucumbers and make more money.
Beyond explaining the structure and definitions of this new field, David described the opportunity for data scientists to lead the way in using the technology. One of the more fascinating concepts is how this field is finding ways to monetize data “exhaust,” which are byproducts of existing data sets that can be used for entirely new purposes. There are many examples and lots written about this topic, as well as how AI is being used in financial services. David writes regularly about analytics and investing at teten.com
Taking a step back from the vast potential of analytics in the future, Marc Trudeau, Principal Consultant at Earnix, presented his insights of the retail banking market today, and challenged the bankers to consider how they will use new analytic methods to better serve their customers.
Two market forces Marc highlighted were: the rising rate environment, which is a major change from the past 10 years that will surely affect consumer lending; and the advent of “Open Banking,” which threatens banks to become nothing more than providers of commoditized transaction services.
Marc presented his ideas for overcoming these market forces and the changing behaviors of the millennial generation, who is fast becoming the prime target of all financial institutions. Most importantly, is the shift from a “product – centric” company to a “customer – centric” company. Such a shift would enable banks to take a holistic view of their customer and better understanding their needs, and as a result have more opportunities to become a preferred provider of financial products.
Using advanced analytics is central to any financial institution’s ability to achieve this new level of service. With the tremendous amount of data financial institutions have about their customers, modern techniques for predicting customers buying potential are readily available. Earnix is helping its clients achieve an even higher level of sophistication – prescriptive analytics, which goes beyond market insight, and can actually provide foresight with direction on how to achieve corporate goals.
A recent research survey done by SourceMedia (American Banker) and sponsored by Earnix found that bankers who were using advanced analytics were three-times more confident of their ability to predict and manage risk and profitability in their home equity line of business, than those not using advanced analytics.
Earnix offers a cloud-based analytics platform specifically designed for the financial services industry. The platform is not only delivering direct and measurable financial results to insurance companies and banks, it is also making operational improvements. Real-time prescriptive analytics that are integrated into the business process helps financial institutions achieve their business goals by being proactive and timely. This new generation of technology allows Earnix clients to have the competitive edge when it comes to optimizing customer offers in the marketplace.
For more information about Earnix and its products please visit: www.earnix.com