Loans still 'paper intensive'
The rise of AI has taken the top spot on a list of banking trends for 2024, according to a new industry report.
The list, compiled by global professional services company Accenture, outlines how generative AI is set to become embedded across the banking sector with the broker sector just one area to be greatly impacted.
As AI becomes more prevalent, the finance sector is juggling how the human face of banking sits with automation and ever-increasing high-end technical skills.
Alex Trott (pictured above), financial services partner: banking sector and client account lead, Accenture ANZ, said his organisation was rapidly working towards a future where AI wasn't just a tool but an integral part of shaping how business operations are conducted.
Trott said despite a huge amount of technology investment from the mortgage industry over the past 10 years, applying for a home loan still felt ‘paper intensive’, bureaucratic and highly manual for all involved, not to mention, time intensive.
The 10-minute mortgage to become the norm
“With the recent leaps forward in generative AI technology, there is genuine optimism that a truly digital 10-minute mortgage will become the industry norm rather than the exception it is today,” Trott said.
“Accenture’s 2024 Banking Trends research has identified that the banking industry is to benefit the most from generative AI development, with the potential to improve operational efficiency by 22% to 30%.”
Trott said it was not all about AI though. To achieve these improvements, lenders would be required to not only utilise the cloud and data effectively, but also to rethink work and talent.
According to Trott, in practical terms AI has moved from the automation of repetitive, routine tasks to that of highly skilled jobs, previously seen as ‘safe’ from the AI wave with Accenture’s Tech Vision 2024 report revealing 44% of working hours are now ripe for automation or augmentation.
“Such statistics understandably have people worried, which is compounded by a general lack of technological understanding – our research found that 36% of workers are reluctant to embrace generative AI as a result,” Trott said.
AI education needed across all industries
While Trott said he thought more education was needed across all industries, the real challenge lay in educating people on how to efficiently use AI tools for both individual and community benefit.
“This [education] begins with dispelling the misconception that AI will simply replace jobs, with the reality being far more nuanced,” Trott said.
“In the context of lenders and brokers, the more manual, repetitive, low cognition activities of mortgage origination and servicing process will continue to be automated.
“Brokers and lending representatives can therefore spend more time on deepening client relationships augmented by new AI powered tools – an early warning customer financial hardship indicator is just one example.”
Trott said with such a powerful and rapidly evolving technology like AI, there were always challenges to consider and pitfalls to watch out for.
Last year ASIC Chair Joe Longo highlighted the risks and issues associated with AI and expressed his concern that there was as yet no consensus on how to regulate AI.
“As lenders and brokers adopt AI into their day-to-day more and more, it’s important for organisations to establish guardrails and to educate their teams about the responsible use of AI,” Trott said.
“There have been numerous well-publicised examples of well-intentioned employees experimenting with OpenAI’s ChatGPT, without realising the data privacy implications of sharing customers’ details, particularly relevant for the likes of brokers and lending representatives who, every day, deal with the intimate details of mortgage applicants.
“To that end, and to guide the behaviour of its own employees and that of its clients, Accenture has developed a 4 pillar Responsible AI framework.”
Brokers’ relationships to benefit from AI
Trott said if “trust-eroding activities can be sidestepped”, AI ha the power to deepen relationships between brokers and borrowers through the reduction of manual, repetitive, lower-cognition activities, allowing brokers more time speaking to, and thinking about, their customers’ best interests.
Trott said Accenture continued to embed artificial intelligence into its “operational fabric”.
“For many years, AI has been deeply ingrained within our operational teams who manage processes and technologies on behalf of our clients as well as Accenture’s own internal operations, with efficiency improvements ranging from 30 to 40% for specific-use cases,” Trott said.
“More recently Accenture has rolled out a suite of Generative AI tools to all staff members and has pledged to invest $3bn USD in generative AI technologies over the next three years, with plans to train more than 250,000 of its employees in AI technologies.”
The Accenture research reinforces a report by Faethm by Pearson released late last year that showed bank workers are forecast to be among those most affected by change driven by increased adoption of AI.
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