The Financial Services

AI Dossier
By Deloitte AI Institute
 The Financial Services AI Dossier | By Deloitte AI Institute

What’s inside

01 03
Introduction Emerging use cases in
2 Financial Services
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02
About the Deloitte AI Institute Top use cases in 04
The Deloitte AI Institute helps organizations connect all the different dimensions of Financial Services Conclusion
the robust, highly dynamic and rapidly evolving AI ecosystem. The AI Institute leads 4 16
conversations on applied AI innovation across industries, with cutting-edge insights,
to promote human-machine collaboration in the “Age of With.”

The Deloitte AI Institute aims to promote the dialogue and development of artificial
intelligence, stimulate innovation, and examine challenges to AI implementation and
ways to address them. The AI Institute collaborates with an ecosystem composed of
academic research groups, start-ups, entrepreneurs, innovators, mature AI product
leaders, and AI visionaries, to explore key areas of artificial intelligence including
risks, policies, ethics, future of work and talent, and applied AI use cases. Combined
with Deloitte’s deep knowledge and experience in artificial intelligence applications,
the Institute helps make sense of this complex ecosystem, and as a result, deliver
impactful perspectives to help organizations succeed by making informed AI decisions.

No matter what stage of the AI journey you’re in; whether you’re a board member or
a C-Suite leader driving strategy for your organization, or a hands on data scientist, After decades as science fiction fantasy, artificial intelligence (AI)
bringing an AI strategy to life, the Deloitte AI institute can help you learn more about how has made the leap to practical reality and is quickly becoming a
enterprises across the world are leveraging AI for a competitive advantage. Visit us at the
Deloitte AI Institute for a full body of our work, subscribe to our podcasts and newsletter, competitive necessity.
and join us at our meet ups and live events. Let’s explore the future of AI together.

www.deloitte.com/us/AIInstitute 1
The Financial Services AI Dossier | By Deloitte AI Institute The Financial Services AI Dossier | By Deloitte AI Institute

Introduction
Six ways that AI creates business value
After decades as science fiction fantasy, artificial intelligence (AI) has made the leap to practical Looking across all AI use cases, there are generally six major ways that AI can
create value for a business:1
reality and is quickly becoming a competitive necessity. Yet, amidst the current frenzy of AI
advancement and adoption, many leaders and decisionmakers still have significant questions
about what AI can actually do for their businesses.

Cost reduction Speed to execution Reduced complexity

This dossier highlights several of the most compelling, business-ready use cases for AI Applying AI and intelligent Reducing the time required to Improving understanding
in Financial Services. Each use case features a summary of the key business issues and automation solutions to achieve operational and business and decision making through
automate tasks that are relatively results by minimizing latency. analytics that are more
opportunities, how AI can help, and the benefits that are likely to be achieved. The dossier low value and often repetitive, proactive, predictive, and able
also includes several emerging AI use cases that are expected to have a major impact on the can reduce costs through Example to see patterns in increasingly
improved efficiency and quality. Accelerating the process complex sources.
industry in the future. of drug approval by using
Example predictive insights to create Example
Automating data entry and a synthetic trial. Reducing factory downtime
Of course, the best uses for AI vary from one organization to the next, and there many patient appointment scheduling by predicting machinery
compelling use cases for AI beyond the ones highlighted here. However, reading through this using natural language maintenance needs.
processing.
collection should give you a much clearer sense of what AI is capable of achieving in a business
context—now, and over the next several years—so you can make smart decisions about when,
where, and how to deploy AI within your own organization (and how much time, money, and
attention you should be investing in it today).

Transformed Fueled innovation Fortified trust

engagement Redefining where to play and Securing a business from
Changing the way people how to win by using AI to enable risks such as fraud and
interact with technology, innovative new products, cyber—improving quality and
enabling businesses to engage markets, and business models. consistency while enabling
with people on human terms greater transparency to
rather than forcing humans to Example enhance brand trust.
engage on machine terms. Recommending new product
concepts and features based on Example
Example customer needs and preferences Identifying and anticipating cyber
Using conversational bots that mined from social media. attacks before they occur.

Nitin Mittal Irfan Saif can understand and respond to

customer sentiment to address
US AI Co-Leader US AI Co-Leader
customer needs more effectively.
Deloitte Consulting LLP Deloitte Risk & Financial Advisory

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For most FSI firms, the important next step is Another rapidly emerging usage area for
to stop dabbling with AI and start embracing AI is automating and enhancing critical FSI
and industrializing it so that AI solutions processes such as fraud detection, payment
can be deployed on a large scale across the processing, cash reconciliation, underwriting,
entire enterprise. This would likely require and claims management. Some of these
core building blocks such as enterprise-wide processes are highly repetitive and labor-
data governance and clear strategies for intensive, making them prime candidates
harnessing the power of AI and data. Simply for automation. Others can greatly benefit
throwing more money at the problem won’t from improved insights and have been using
be enough. targeted analytics for decades; however, AI is
lifting those analytics capabilities and insights
One focus area that continues to get a lot to a whole new level.
of attention in FSI is using AI to improve the
customer experience—not only for a firm’s Industry convergence is another key trend
end customers, but also for its internal being driven by AI—and it’s not just limited
customers such as agents, brokers, and to FinTechs. AI technologies, fueled by the
financial advisors. For example, AI is helping explosion of digital data, are enabling entirely
make chatbots and IVR systems far more new products, services, and business models
intelligent and sophisticated than before, that blur traditional industry lines. And the
improving the quality of automated customer speed, scale, and scope of this industry
interactions and seamlessly integrating and convergence seems to only be increasing.
orchestrating multiple interaction channels.

Top use cases in

Similarly, predictive AI is being used to Thinking longer term, an important trend
engage with customers more thoroughly and that is almost certain to take root in FSI
effectively throughout their entire lifecycle is using AI and digital data to break down

Financial Services
from personalizing marketing campaigns and functional silos and generate insights that
promotions, to recommending individualized span the entire value chain. (For example,
next best actions, and plans. using data from an insurance chatbot to
inform the underwriting process). However,
capitalizing on these broad, large-scale AI
Aside from numerous FinTechs AI on their businesses—and that AI is an use cases and opportunities would require
that are fully embracing AI, most inevitable part of the industry’s future, the enterprise-level AI building blocks and
firms in the financial services and the primary fuel for future growth and industrialization capabilities noted earlier,
industry (FSI) are still in the very competitiveness—most AI investments and which are still being developed.
early stages of AI adoption and investment. efforts to date have been limited to small-
Although FSI leaders generally recognize scale pilots and niche use cases focused on
and acknowledge the potential impact of narrow parts of the business.
AI is helping make chatbots and IVR systems far more
intelligent and sophisticated than before, improving the quality
of automated customer interactions and seamlessly integrating
4
and orchestrating multiple interaction channels. 5
The Financial Services AI Dossier | By Deloitte AI Institute The Financial Services AI Dossier | By Deloitte AI Institute

Fighting fraud Chatbots that do more than chat

(Banking Fraud Analytics) (Conversational AI)

Use AI and machine learning to detect How AI can help Use conversational AI solutions such as chatbots How AI can help
transactional and account takeover fraud and virtual assistants to handle a wide range
• Detect fraud in real time. Banks have deployed • Advise customers without human intervention.
across the banking value chain. of consumer-facing activities—from helping
machine learning models that can detect suspicious Robo-advisors can use data analysis and regression
consumers find a better credit card or cancel
transactions in real time and immediately alert models to analyze a customer’s current financial
Issue/Opportunity unneeded accounts, to negotiating collections.
authorities. situation, goals, and investment interests and then
According to the American Bankers Association, the
provide tailored financial recommendations (such
finance industry incurred about $2.2 billion in fraud • Spot suspicious activity that humans might miss. Issue/Opportunity
as tax-loss harvesting, goal planning, retirement
losses in 2016, rising to about $2.8 billion in 2018.2 Banks can use AI models to quickly and accurately In recent years, consumer demand for the ability to
planning, and automatic asset investment) over the
Banks need the ability to predict and detect fraud identify suspicious patterns in large datasets that a manage finances remotely has grown significantly,
phone or through a chatbot, without the need for
more quickly and accurately in order to reduce their human would likely miss. This would allow banks to overwhelming customer service call centers and
input from a human advisor.
annual fraud losses and better manage the fraud analyze suspicious transactions and transfers that agents. Banks can relieve the pressure by using
resolution customer experience—improving trust could indicate an account is being used to conceal conversational AI to provide personalized financial • Automate debt collection. Many of the mundane
and compliance with their customers and partners. and legitimize funds from criminal activities. Also, plans, enhance customer relationships, and even monitoring and administrative tasks related to
AI can help reduce the number of false positives, automate debt collection activities. collections can be automated using AI-enabled
thereby reducing compliance costs. RPA technologies. These AI technologies can
send out automated reminders to customers,
• Flag consumer transaction fraud. Machine learning
track effectiveness, and recommend next steps
models can predict potential fraud in future
to the collections team with minimal human
transactions by studying historical transaction
input and oversight.
patterns in traditional and non-traditional data,
and then using anomaly detection to spot unusual • Serve customers through chatbots and other natural
account activities. This allows banks to uncover language applications. Natural language processing
problems that could be overlooked by their legacy (NLP) models can be used to develop chatbots
fraud analytics engines. and other customer service applications that learn
a customer’s typical spending behavior, provide
tailored offerings, and give banks a better overall
view of their customers. The AI systems can then
recommend the most relevant credit cards and
checking accounts, and even alert customers about
unneeded accounts.

Possible benefits Possible benefits

Reduced fraud and improved trust. Less manual auditing and lower fraud detection costs. Improved efficiency and service quality.
Banks can use AI-enabled detection models to significantly reduce AI-enabled fraud detection models can decrease the need for AI can provide clients with personalized financial investment plans
overall fraud, thereby improving customer trust and the overall manual auditing, thereby potentially reducing the overall cost of a and products tailored to their unique needs and goals, and can do
customer experience. bank’s fraud detection operations. so more accurately and efficiently than a human advisor.

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Hyper-personalization Underwriting that goes over and above

(360° Customer Experience) (Insurance Underwriting)

Use AI to acquire customers and deliver an These kinds of capabilities, which are already Use AI and machine learning to help enhance How AI can help
ultra-personalized, end-to-end customer foundational in other industries, are poised to fuel underwriting processes and risk evaluation,
• Automate the underwriting process. Text mining and
experience supported by deep AI-driven financial services in the near future. aid in decreasing decision times, and
natural language processing can be used to enable
insights, including customer churn prediction/ possibly improving the customer experience
automated underwriting platforms that eliminate the
prevention, estimated customer lifetime How AI can help and bind rates.
need for human touch, drastically reducing the time
value (CLV), marketing optimization, customer
• Better understand customer needs and expectations. required to process applications.
segmentation and personalization, and next Issue/Opportunity
With AI, banks and insurance companies have the
best action. Despite substantial investments over the past several • Make applying for insurance simpler and more
power to understand customer expectations at
years to digitize customer onboarding and policy user-friendly. Machine learning models have shown
every step of the customer experience.
Issue/Opportunity binding, progress has been slow and incremental, with that insurers can accurately assess risk with less
AI technologies can help traditional banks and • Predict customer churn. Machine learning models many insurance companies failing to meaningfully information. This creates an opportunity to simplify
insurance companies acquire customers, grow can estimate customer lifetime value (CLV) and scale their efforts to modernize underwriting. insurance applications and remove invasive tests
revenue, and maintain customer loyalty by giving predict customers’ propensity to churn based on and questions, making the entire process much
an organization the ability to better understand its their profile and transaction data. more user-friendly.
customers (and their evolving expectations) and then • Improve customer segmentation and personalization. • Simplify risk assessment. Using machine learning,
deliver a hyper-personalized customer experience. AI and machine learning models can increase the insurers can now identify different categories of risk,
accuracy and granularity of customer segmentation each with its own set of risk factors. This simplified
In banking, for example, the traditional mass and personalization by deeply analyzing historical risk assessment process allows companies to speed
campaign model for acquiring customers is being and real-time data. up deployment of their AI models.
disrupted by an AI-driven approach that focuses
• Determine the next best action. Machine
on “buying moments”—enabling banks to offer the
learning models can be used to predict a
right product at the right time to the right client. This
customer’s propensity to accept additional
approach targets carefully selected acquisition pools,
offers based on past behavior.
micro geographies, and customer segments based
on life stage, banking wallet, and short- and long-term
value potential.

Possible benefits Possible benefits

Expanded customer acquisition and revenue opportunities. Optimized investment decisions. Accelerated process improvement. Reduced costs and higher margins.
Through an AI-driven 360° customer experience, banks and Building large customer datasets and then using advanced AI and Through AI, insurance companies can accelerate the development AI can be used to automate the underwriting process and
insurance companies can expand their revenue opportunities by machine learning tools to provide custom designed-products and deployment of product purchasing journeys that are data- streamline the manual touchpoint of surveys and questionnaires.
acquiring new customers and recommending products tailored to and services enables investment decisions to be optimized and augmented and digitally enabled. This can reduce underwriting costs and drive higher margins that
a customer’s unique needs. integrated across products, channels, etc. can be used to grow and expand the business.

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Trade operations made easy Emerging AI use cases in Financial Services

(Trade Operations Automation)

Use AI and machine learning to help automate How AI can help

Payment
tasks such as trade reconciliation and
• Quickly implement trade reconciliation tools using
operational exceptions remediation.
cloud-based AI. Through a cloud interface, firms
can implement trade reconciliation tools in less

with a smile
Issue/Opportunity
than a day at extremely low cost, quickly producing
Many financial firms are currently facing exponential
a positive ROI. Many cloud-based solutions have
growth in both the number and complexity of traded
embedded AI capabilities that can expedite
products. This is straining the reconciliation process,
reconciliation activities.
which has traditionally required manually integrating (Biometric Digital Payments)
information from a multitude of internal and external • Automate the process of capturing information
systems. Using machine learning to automate many from invoices. AI models can use computer vision
of the maintenance tasks associated with trade and natural language processing to understand
the structure of an invoice and then use that
Using facial recognition and other AI-based biometric
operations can increase both accuracy and efficiency.
knowledge to extract key information such as the technologies to process payments.
seller’s name, institution address, and amount
due. Also, AI models can take human feedback The holy grail for digital payments is to find a mechanism that
into account for future invoices, dramatically is both highly convenient and highly secure. Machine learning
accelerating the reconciliation process.
and deep learning enable sophisticated forms of identity
• Reduce human error and time to close. Manual authentication based on biometrics such as face recognition,
rules-based matching/reconciliation can take days speech recognition, fingerprint recognition, and retina
to close each month, and is highly susceptible to
recognition. Some businesses in China are using a smile-to-
human error. Automating the process with RPA
reduces the time required to close and minimizes
pay system that allows consumers to authorize payments
the risk of human error. simply by smiling into a camera3—and adoption of similar
systems in other countries seems almost certain in the not-
too-distant future. AI-powered biometrics can also play a key
role in two- or three-factor authentication systems, which are
far more secure than passwords alone. After all, what could be
more uniquely you than security characteristics directly tied to
your personal genetics and DNA?

Possible benefits

Lower costs. Faster close with fewer errors.

AI can reduce the time and labor required to By reducing errors due to human input, AI can accelerate
reconcile transactions. the monthly closing process.

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Emerging AI use cases in Financial Services Emerging AI use cases in Financial Services

Insurance that Stopping criminals

adapts to you in their tracks
(Usage-based Insurance) (Consumer Fraud Detection)

Using AI to adjust insurance coverage and rates on-the- Using AI to predict, prevent, and detect insurance fraud
fly based on a customer’s actual behavior and needs. and questionable financial transactions.

Perhaps the biggest limitation of traditional insurance Fraud has been a major concern for the financial services
underwriting methods is that they rely on actuarial industry since its inception; however, the explosion of digital
calculations and statistics associated with groups of people technologies and data in recent years has only made things
with similar attributes, rather than basing rates and coverage worse. Now, machine learning and other AI technologies are
on the actual behaviors and attributes of the person being poised to reverse the trend—guarding against fraudulent
insured. However, thanks to AI, that could all change. Usage- payments, reducing the risk of fraud and abuse for
based insurance (UBI) is already common for auto insurance, customers’ accounts, and identifying insurance customers
leveraging in-vehicle telematics and smartphone apps to who are abusing their policies. Also, AI algorithms can
track a variety of critical driving habits—such as acceleration, automatically identify and analyze risk factors for individuals
braking, cornering, miles driven, and phone use—and and organizations, continuously scanning for clues across
then raising or lowering the driver’s insurance premiums numerous data sources—including social media and deep
accordingly. But in the future, UBI models will likely expand web forums—to address potential fraud before it occurs. With
into many new areas, including everything from airline flights AI, financial services firms finally have a chance to get in front
and commercial trucking (with varying rates for different of criminal behavior, instead of being a step behind.
weather conditions and load types) to washers and dryers and
phone batteries (with rates based on an individual’s unique
usage patterns). This would enable insurance customers to
buy the exact insurance they need—and pay exactly the right
price. Aside from the technical barriers, which are rapidly
being tackled, regulatory constraints could also slow the pace
of UBI adoption and innovation, particularly for personal lines
and individual coverages.
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Emerging AI use cases in Financial Services Emerging AI use cases in Financial Services

Making credit Not just location,

risk less risky location, location
(Credit Risk Analytics) (Real Estate Price Estimation and Prediction)

Using AI to assess risk and creditworthiness for loans Using AI to estimate real estate values by analyzing a
and credit cards. wide range of variables—including new types of data,
such as geographic images from drones.
Success in the lending business largely hinges on making
smart choices and trade-offs about credit risk. AI can help When it comes to valuing real estate, the classic quip is that
lenders and credit card companies make more informed the three biggest factors are location, location, location.
choices. And ironically, it can do the same for borrowers And while there’s a lot of truth to that statement, in reality
as well. Machine learning and other AI technologies can there are many complex variables that go into estimating
automatically assess a borrower’s creditworthiness—even property values and predicting price trends—making AI the
for non-prime and unbanked borrowers—and can support perfect tool for the job. For example, emerging AI systems are
the loan management process across its entire lifecycle, enabling sophisticated valuation models for properties and
including automated documentation and compliance neighborhoods using computer vision and other advanced
validation. At the same time, AI can enable app-based technologies to analyze geographic images from drones.
online platforms for residential and commercial mortgage New AI-powered capabilities like these can enable real estate
loans, using advanced algorithms to analyze a borrower’s investors to assess opportunities much more accurately,
financial information and then recommend loan options boosting their return on investment.
from multiple lenders. And in some cases, it can be as easy
as having borrowers scan their driver’s licenses and answer
a few basic questions. Advanced capabilities like these are
a win-win for borrowers and lenders alike, enabling smarter
choices with less effort and risk.

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Conclusion

The key to
Although AI adoption rates and maturity levels vary
widely across industries—and even within them—
there seems to be no question that AI is here to
stay. In fact, AI is quickly becoming a competitive

success is to start
necessity for nearly all types of businesses—driving
unprecedented levels of efficiency and performance
and making it possible for businesses of every
shape and size to do things that simply weren’t

small but think big.

possible before.

The key to success is to start small but think big.

According to a recent Deloitte survey—State of AI in
the Enterprise, 3rd Edition—74 percent of businesses
surveyed are still in the AI experimentation stage with
Beena Ammanath
a focus on modernizing their data for AI and building
Executive Director of the Deloitte AI Institute
AI expertise through an assortment of siloed pilot
Deloitte
programs and proofs-of-concept, but without a clear
vision of how all the pieces fit together. By contrast,
only 26 percent of businesses surveyed are focused
on deploying high impact AI use cases at scale, which
is when the real value kicks in.

In this compendium, we’ve highlighted many of the

most compelling and business-ready use cases in
every major industry. However, a use case is only as
good as the extent to which it is actually used. No
matter how compelling an AI use case might seem
on paper, its full value can only be unlocked if you
embrace and deploy it at scale across your broader
enterprise and ecosystem.

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Contact us Acknowledgements

Our insights can help you take advantage of chance. If you’re looking for fresh ideas to address your Deloitte AI Institute leadership expresses their deep Deloitte AI Institute leadership also expresses their
challenges, we should talk. gratitude to the following for their contributions appreciation for the support that made this report
to the development of this report (in alphabetical possible (In alphabetical order): Lisa Beauchamp,
order): Jeffrey Brashear, Pil Chung, Prince Nasr Rameeta Chauhan, Caroline Chen, Bethany
Monica O’Reilly Nitin Mittal
US Financial Services Industry US AI Co-Leader
Harfouche, John Houston, Garrett O’Brien, Gina Donato, Karishma Gupta, Stephen K. Lee, Greg
Leader, US Risk & Financial Advisory Deloitte Consulting LLP Primeaux, Sandee Suhrada, Snehal Waghulde, Lerner, Lori Lewis, Parker Lytle, Raghav Nyati,
Financial Services Industry Leader, [email protected] and Jib Wilkinson. Jamie Palmeroni-Lavis, Meredith Parker, Tracey
Vice Chair Parry, Manasi Patel, Jacinta Pope, Raksha
Deloitte Risk & Financial Advisory Raghunath, Vignesh Ramakrishnan, Kate M.
[email protected] Irfan Saif Schmidt, Christine Svitila, and Christina Scoby.
US AI Co-Leader
Liliana Robu Deloitte Risk & Financial Advisory
US Consulting Financial Services [email protected]
Industry Leader, Principal
Deloitte Consulting LLP
[email protected] Beena Ammanath
Executive Director of the
Deloitte AI Institute
Deloitte
[email protected]

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Endnotes
1. Source: Deloitte analysis

2. “Deposit Account Fraud Survey,” American Bankers Association, January 1 2020.

3. “Smile-to-pay: Chinese shoppers turn to facial payment technology,” The Guardian, September 4, 2019.

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