22 FOCUS BY EAC AI: THE FUTURE OF MALAYSIAN BANKING SECTOR OCTOBER 2017 MALAYSIAN BUSINESS W E have seen how Tesla came out with driverless cars; Siri commanding applications, information and functions in your mobile phone at your behest - and NetFlix, analysing your preferences and helps you to segment the shows and programmes for you. All these three examples have one thing in common - Artificial Intelligence. These are very efficient and intelligent machines that seem to be your “buddy” when it comes to your daily activities. Now, what if there are such machines capable of changing the roles and functions of banks, say in the next five to 10 years? The real question is: are Malaysian banks going to face some real challenges dealing with the use of AI or are they going to reap bountiful opportunities with it, and change their business model forever? This article deals with critically examining the state of readiness of Malaysian banks in the use of AI and what are the ways they can pursue to be agile, adaptable and embracing digital transformation through adoption of AI. ---------------------------------- CURRENT TECH SCENE IN MALAYSIAN BANKING SECTOR Malaysian banks are increasingly facing pressures vis-à-vis technological ad- vancement, largely driven by shifting consumer demands, the rise of Fintech, and foreign banks getting full licenses in. In additions, the digital economy is sky-rocketing in importance, which means that new technical skills and ‘higher level’ capabilities are expected from the current workforce. Malaysia’s deputy finance minister, Datuk Wira Othman Aziz concurred with the observation as he called on the banking sector to disrupt themselves before others do to them. On this note, he stated, “I call upon the sector to rise up to the challenge by investing in technology and innovation or start evaluating commercially viable ways to collaborate with these Fintech startups in order to remain competitive in this new and changing landscape” It is not far-fetched to say that while a large number of small and medium enterprises and local start-ups have embraced AI. technology; banking institutions seem to be rather reticent on adopting the latter. Despite the fact that banks have a strong IT heritage, they seem to lack the agility to transform their businesses with modern AI technology as a means to add value to their service. What is more, Malaysian banks are struggling to connect with an emerging millennial population – the tech-savvy generation. In its 2016 Malaysia banking industry study, Gallop found that 60% of Malaysian banking customers overall and 64% of millennial banking customers are indifferent toward their primary banks. So if you are a Malaysian banker, don’t you feel the adrenaline rush when confronting this fact? ARTIFICIAL INTELLIGENCE AS THE ANSWER Here is the answer to the problems faced by Malaysian banks: Artificial Intelligence, or simply known as AI. For people who are still unfamiliar with the term, it has become a buzzword in 2017. The term crops up frequently when the topic is related to big data, analytics and the broader waves of technological changes which are sweeping through the world. Even Datuk Seri Mohd Najib Tun Razak, the Prime Minister of Malaysia stressed the importance of AI during
Transcript
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FOCUSBy EAC
AI: ThE FuTurE oF MAlAySIAn BAnkIng SeCtOr
O C T O B E R 2 0 1 7 M A L A Y S I A N B U S I N E S S
W E have seen how Tesla came out with driverless cars; Siri commanding applications,
information and functions in your mobile phone at your behest - and NetFlix, analysing your preferences and helps you to segment the shows and programmes for you.
All these three examples have one thing in common - Artificial Intelligence. These are very efficient and intelligent machines that seem to be your “buddy” when it comes to your daily activities.
Now, what if there are such machines capable of changing the roles and functions of banks, say in the next five to 10 years?
The real question is: are Malaysian banks going to face some real challenges dealing with the use of AI or are they going to reap bountiful opportunities with it, and change their business model forever?
This article deals with critically examining the state of readiness of Malaysian banks in the use of AI and what are the ways they can pursue to be agile, adaptable and embracing digital transformation through adoption of AI.
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Current teCh SCene in MalaySian Banking SeCtorMalaysian banks are increasingly facing pressures vis-à-vis technological ad-vancement, largely driven by shifting consumer demands, the rise of Fintech, and foreign banks getting full licenses in. In additions, the digital economy is sky-rocketing in importance, which means that new technical skills and ‘higher level’ capabilities are expected from the current workforce.
Malaysia’s deputy finance minister, Datuk Wira Othman Aziz concurred with the observation as he called on the banking sector to disrupt themselves before others do to them. On this note, he stated,
“I call upon the sector to rise up to the challenge by investing in technology and innovation or start evaluating commercially viable ways to collaborate with these Fintech startups in order to remain competitive in this new and changing landscape”
It is not far-fetched to say that while a large number of small and medium enterprises and local start-ups have embraced AI. technology; banking institutions seem to be rather reticent on adopting the latter. Despite the fact that banks have a strong IT heritage, they seem to lack the agility to transform their businesses with modern AI technology as a means to add value to their service.
What is more, Malaysian banks are
struggling to connect with an emerging millennial population – the tech-savvy generation. In its 2016 Malaysia banking industry study, Gallop found that 60% of Malaysian banking customers overall and 64% of millennial banking customers are indifferent toward their primary banks. So if you are a Malaysian banker, don’t you feel the adrenaline rush when confronting this fact?
artifiCial intelligenCe aS the anSwerHere is the answer to the problems faced by Malaysian banks: Artificial Intelligence, or simply known as AI. For people who are still unfamiliar with the term, it has become a buzzword in 2017. The term crops up frequently when the topic is related to big data, analytics and the broader waves of technological changes which are sweeping through the world. Even Datuk Seri Mohd Najib Tun Razak, the Prime Minister of Malaysia stressed the importance of AI during
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“Are Malaysian banks going to face some real challenges dealing with the use of A.I or are they going to reap bountiful opportunities with it, and change their business model forever?”
Bank Sector’s CurrentTECH SCENE
Lack the agility to transform their businesses with modern A.I technology as a means to add value to the service
Struggle to connect with an emerging millennial population – the tech-savvy generation
60% 64%Millennial banking customers
Malaysian banking customers overall
are INDIFFERENT toward their primary banks.
So, What Is
A.I?“Broader concepts of machines being able to carry out tasks in a way that we would consider it smart.”
“a constellation of technologies, including machine learning, perception, reasoning, and natural language processing”
How Can A.I.
HELP?“A.I helps banks make faster decisions and achieve more goals”
“A.I helps banks engage their customers on a deeper, more personal level”
What Are the NEXT BIG THINGS about A.I?
Chatbots Virtual AssistantsRead, review and analyse vast quantities of disparate data, providing insight into how customers feel about a company’s products or services and why they feel the way they do.
Software programs that use messaging as an interface through which companies can help their customers answer questions, find information and offer personalisation.
Here’s the evidence.
24 US-ASEAN Summit 2016 when he said:
“ASEAN has the opportunities to leapfrog its cognitive artificial intelligence development.”
What does AI exactly mean? In a layman term, AI is the broader concepts of machines being able to carry out tasks in a way that we would consider it smart. To delve deeper, Kate Crawford and Meredith Whittaker, co-chairs of 2016 AI Now symposium define AI as “a constellation of technologies, including machine learning, perception, reasoning, and natural language processing”.
Now, let’s get to the heart of this matter by answering this question: what impact will AI have on Malaysian banking sector?
To answer the question, EAC CEO and Global Head of its Data Science and Analytics unit, Nazri Muhammad made the following observation:
“Indeed, Artificial Intelligence can
help players in banking sector make faster decisions and achieve more goals. The more goals a bank helps people achieve, the more confident people will be in the partnership”
AI makes a real difference in banking sector by helping them engage customers on a deeper, more personal level. Today, AI is radically enhancing the personalisation of information that fuels such engagement. Nowhere is this more evident than in AI’s next big thing: chatbots and virtual assistants.
Chatbots are software programs that use messaging as an interface through which companies can help their customers answer questions, find information and offer personalisation. They are ideally suited to a mobile platform and have been made significantly more powerful by advances in machine learning and natural- language processing. Imagine that in the future, you do not have to hassle to the banks and waiting for a long time just to get financial advice
from the bankers. All you need to do is simply turning on your mobile phone and consulting the chatbot from home.
Besides that, AI tools are able to perform what no single human—or even a team of people—could hope to do. They can read, review and analyse vast quantities of disparate data, providing insight into how customers feel about a company’s products or services and why they feel the way they do.
Similarly, investment banks can use machine learning to enhance their investment research. For example, firms can identify clients best positioned for follow-on equity offerings through automated analysis of current financial positions, market conditions and historical data.
Backed by machine learning and big data, AI can automate tasks previously done by humans to help us make better, more informed decisions. These machine learning systems will drive AI applications towards the ease of interaction customers are craving for. This, in effect, can help banks
Chatbots are software programs that use messaging as an interface through which companies can help their customers answer questions, find information and offer personalisation.
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eliminate time-consuming routine work.
For example, the recent deployment of AI technology by UBS’s investment banks manages to save time by doing a task that takes 45 minutes for a normal person in only two minutes, while freeing the investment bankers for other important tasks. In addition, banks can cut cost by conducting rationalisation of headcount in the more monotonous work area.
ConCluSionAlthough there are certainly hurdles that players in Malaysian banking sector are facing with regards to technological advancement, undoubtedly the answer lies in the application of AI technolo-gy within the sector. Better customer engagement, new cutting-edge insights, and effective cost-cutting initiatives are some of the advantages that AI could of-fer to Malaysian banks if they choose to embark on a journey to the AI future.
ArtIFICIAl IntellIgenCe At A glAnCe
Artificial intelligence (AI) is the field within computer science that seeks to explain and to emulate, through mechanical or computational processes, some or all aspects of human intelligence. Included among these aspects of intelligence are the ability to interact with the environment through sensory means and the ability to make decisions in unforeseen circumstances without human intervention.
Typical areas of research in AI include game playing, natural language understanding and synthesis, computer vision, problem solving, learning, and robotics.
The above is a general description of the field; there is no agreed upon definition of artificial intelligence, primarily because there is little
agreement as to what constitutes intelligence. Interpretations of what it means to be intelligent vary, yet most can be categorised in one of three ways.
Intelligence can be thought of as a quality, an individually held property that is separable from all other properties of the human person. Intelligence is also seen in the functions one performs, in actions or the ability to carry out certain tasks.
Finally, some researchers see intelligence as a quality that can only be acquired and demonstrated through relationship with other intelligent beings. Each of these understandings of intelligence has been used as the basis of an approach to developing computer programs with intelligent characteristics. – encyclopedia.com
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