What is artificial intelligence (AI)?

Artificial intelligence consists of the use of state-of-the-art technologies through which information technologies (IT) and machines can learn, understand and act – and at some point perceive and feel.

Financial Services companies under competitive pressure expect AI transformations in a groundbreaking way – and above all high profitability as a result. If the use of AI is carefully planned and implemented, this will be possible..

At the same time, these technologies will change the way people work and the workplace itself. Machines will be able to perform more of a person’s tasks, complement a person’s work and even perform some tasks that go beyond what a person can do. As a result, some occupations will decrease, others will grow, and many more will change.

What holds financial services companies from implementing AI?

• Data silos and incompatible IT infrastructure
• Tighter regulatory scrutiny
• Slow to react
• Hype-driven scattershot goal-setting
• Lack of understanding and potential

Which success factors need consideration?

1. Understanding the risk tolerance of your company
2. Understand the individual needs of your business
3. Selecting the appropriate AI service providers
4. Implementing AI solutions based on a well-thought-out plan, relative to need and risk tolerance

1. The Risk Tolerance of your Company

Artificial intelligence brings both opportunity and risks. The additional risk that results from the complexity of the models for AI and Machine Learning must be considered and mitigated.

Artificial intelligence will transform the financial services industry, using vast amounts of data to create models that improve decision making, service customization and risk management.

However, there is a downside since AI amplify some elements of model risk. Many financial service companies, especially in countries with stringent regulatory requirements, have validation frameworks and practices in place to assess and mitigate the risks associated with traditional models, these are often insufficient to manage the risks associated with machine learning models. Our clients are aware of this and very cautious.

While 21% of our clients associate potential financial risks with the use of AI, 96% believe that reputational and regulatory risks will be the biggest challenges in the financial services industry.

LKPU Consulting supports you in …

• defining the risk tolerance of your company in connection with the use of AI;
• identifying low-risk applications within your process landscape;
• improving your model risk management to meet future challenges and ultimately adopting a sustainable approach.

2. The Individual Needs of your Company

The use of AI requires, above all, understanding what is to be done with it within your company.

The technology offers an extensive range of possibilities for most industries and sectors. There are many possibilities for the financial services industry to use AI. However, different financial service providers have different needs.

To get clarity, use cases for your company must be identified and described precisely.

• Is there a business requirement today that you can satisfy with the use of AI?
• Can this technology solve a specific technical problem for you today?
• Would you like to invest in technologies that are neither applied in your process landscape, nor can they be integrated into your IT landscape today, but could bring a strategic advantage for your company in the future?

LKPU Consulting supports you with our “Problem Frameworking” approach …

• to identify concrete fields of action;
• to specify the challenge to be met by AI;
• to take preparatory measures that are necessary for the use of AI (O2-Readiness).

3. Select an AI Service Provider

Over 3000 companies and start-ups offer AI solutions for businesses.

Many providers = many possibilities = high complexity of the selection process.

LKPU Consulting supports you in …

• determining suitable technologies and implementation partners;
• control them within the framework of the implementation;
• continuously evolve your rules and regulations.

4. Implementation of AI Solutions

Implement AI solutions based on a well-thought-out implementation plan, considering your needs and risk tolerance

The implementation of AI technologies requires a carefully thought-out implementation plan.

LKPU Consulting supports you in …

• precise planning and preparation for the use of AI;
• continuously controlling the working results;
• defining the dataset and mapping it to use cases;
• monitoring the implementation.