Artificial intelligence thrives with data. The more data you have, the better your algorithms will be. However, just having a lot of data is not sufficient anymore. You also need high-quality data, or in the words of Peter Norvig, you need better data:
“We don’t have better algorithms, we just have more data. More data beats clever algorithm, but better data beats more data.” – Peter Norvig – Director of Research, Google
Nowadays, most organisations collect vast troves of data, but especially the financial sector is well-suited for also collecting high-quality data. Simply because of regulations and because a lot of data in the financial sector is structured data. There is also an abundance of data in public markets or other external sources that can be linked for additional insights. As it seems, banks and insurance companies can benefit a lot from AI, if implemented correctly, of course.
Besides, more and more consumers require financial institutions to innovate. They have become fatigued with overbearing fees to their manage capital and provide products such as credit. The below graph by State of AI clearly shows the difference in costs between traditionally managed wealth and automated management of wealth. As a result, the financial sector faces pressure (not only by customers but also by their shareholders) to reduce their operating expenses by adopting automation.
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By Dr Mark van Rijmenam
Keywords: AI, Digital Transformation, FinTech