AI - For the better?

__AI is starting to transform the financial services landscape, offering as it does the ability to reduce cost, improve accuracy, prevent fraud and cut the need for that most expensive of resources, actual human beings. There’s no denying the appeal of something that can shorten claim times, drive down the costs of transactions and make the process of applying and buying, easier and more intuitive.

But AI also raises the prospect of financial service providers having the ability to cherry-pick and choose to serve only those markets and segments of markets that are most profitable and least risky for them. It’s already being used for risk analysis and to identify and stop fraudulent claims in insurance; but concerns have been raised that it is being used to improve margins by pricing out those it ‘learns’ are more likely to claim – often on the flimsiest of indicators such as a surname.

The combination of capability and autonomy it delivers, means that AI is making choices with profound consequences for customers and employees alike. Transparency is now at risk, when the complexity of the algorithms sometimes means that the answer is literally ‘because the computer says no’.

In 2019, businesses must think carefully when applying AI to their processes. Each will have to balance their need to protect margin and improve profitability, with the need to act responsibly and be able to explain how decisions are made.