Hard-won wisdom from AI's early adopters

October 2, 2018 7:45 AM

While many observers agree artificial intelligence is the future, getting there has not always been easy.

During the BankAI conference last week, however, speakers offered insights on what they've learned in implementing AI into the various parts of the financial system, including customer-facing, back-office and risk and compliance areas.

Following are the lessons they offered.

Funding and executive support are critical

At Wells Fargo, Chuck Monroe (pictured) set up AI Enterprise Solutions in March 2017 in an effort to ensure all AI projects and AI-related tech vendor relationships were overseen by a single office. U.S. Bank, BBVA Compass and Banco Popular similarly have groups that help deploy robotics and AI throughout their organizations.

But Monroe didn't get immediate cooperation from other departments.

"We spent several months going around the organization trying to understand who is doing what," said Monroe, who is executive vice president and head of enterprise AI solutions. "As you can imagine, in a large organization like Wells you come in and you're now a new center of excellence at the company, nobody wants to take your phone call."

The fix, he found, was to get funding for all AI activities at the company.

"The first call they don't take, the second call is a voice mail saying, 'I have money,' and 10 minutes later they're calling me back," Monroe said.

AI has to be managed carefully

Wellington Holbrook, chief transformation officer at ATB Financial.

Wellington Holbrook (pictured), the chief transformation officer of ATB Financial, now has a vision for how AI will pervade the organization.

The firm has been using technology called Eva from Finn.ai, and Holbrook expects to ramp up its use rapidly.

“We see a world within about 18 months where almost all work will be done by, assisted by or augmented by AI,” he said. “Eva is the interface to do that.”

Holbrook expects 25% of the organization will be completely automated by AI in 18 months.

“That's the work of 1,250 people and people know that,” he said. “Some teams will be affected more quickly than others. We need those people more than ever.”

Not everybody has been on board with the changes, however.

“We lost a quarter of our technology teams in the first six months of this transformation,” Holbrook said. “That was hard. Some people voluntarily left.”

For instance, as part of the transformation, the bank has migrated from Microsoft Office to G Suite.

“That was a hard change for a lot of people in IT, to the point where people were going through massive efforts to sabotage for various reasons, sometimes just because they have been using Microsoft Word since 1995 and can't change,” Holbrook said.

Others didn’t like the bank’s shift from waterfall to agile development, where software is being created in two-week sprints.

Prepare for regulatory pushback

All bankers fear that regulators will object to their use of AI and a perceived “black box” in which decisions are made without human oversight. But that's no reason to resist using AI, bankers said.

"We've been working closely with our regulators for that very reason,” Monroe of Wells Fargo said. “It is a real concern.”

The bank has a model governance process through which every model has to go through independent review, in part for explainability.

“If we decline a loan, we have to tell you why,” Monroe said. “And if there's some variable that's sitting out here that puts you over the edge for the decline, and I can't explain that, that's never going to make it into production."

Moreover, banks can't just automate existing processes or layer AI on top of them. It has to be more fundamental than that.

"Automating bad processes won't do anybody any good," Monroe said.

Avoiding excessive regulatory scrutiny can also be helped by working with auditors and information security experts ahead of time.

"Especially if you're going to build these on the cloud, you open up part of your internal system to the cloud, the infosec team is going to have something to say about it," said Federico Montanana, program director, artificial intelligence and RPA at Banco Popular.

Use the right technology for the right purpose

Alejandro Carriles (pictured), executive vice president and director of mobile and online and digital sales at BBVA Compass, shared some of his bank’s experience when it launched one of the first AI-powered virtual assistants, Lola, in 2010.

“It was way ahead of its time,” he said.

But when people were given the technology, which was sophisticated enough to interpret natural language into actions, people would just ask it, "What is my balance?" Or ask it to pay a bill. Such tasks are better handled by tapping buttons on a screen, Carriles argued.

“Tools have a purpose,” he said. “Imagine trying to draw with a mouse. Simple. Now try typing with a mouse. A mouse has its purpose, a keyboard has its purpose. AI should be used for other types of things. It should be invisible behind the scenes. You need to make it transparent, felt but not seen, the way a car might automatically brake when a truck pulls in front of it.”

The right data is critical

Several industry executives emphasized that financial firms need to ensure they have the right data in place. Wrong data will lead to serious misfires by an AI engine, as will insufficient data.

"It's all about the data," Monroe said. "We at Wells have a data lake strategy that we're moving forward with. But it's not there yet."

Having a robot in a bank branch can generate a lot of goodwill

Steve Tsuida stsuida@me.com

HSBC Bank set up a humanoid robot named Pepper in its Park Avenue office earlier this year.

"In the first 30 days, we had 5,500 interactions with Pepper," said Jeremy Balkin, head of innovation at the bank. "We had 551 million social media impressions on traditional social media channels relating to HSBC and Pepper the robot. Usually when a bank story goes viral it tends not to be positive. This is positive."

Pepper has brought additional foot traffic and business to the branches.

It’s important to have strong governance so bots don't run wild. "You want to have some clear policies, documentation, workflow over the RPA environment," Banco Popular's Montanana said.

Editor at Large Penny Crosman welcomes feedback at penny.crosman@sourcemedia.com.