There is much debate about the potential impact of artificial intelligence, not just on the financial services industry, but society as a whole.
A common concern is the possibility for it to replace jobs, while the Financial Conduct Authority has said that AI could help close the advice gap.
But some firms in the financial services industry have already embraced AI.
In a survey of CFA Institute members, more than half (56 per cent) said their firms were routinely using AI and ‘big data’ solutions in data analysis. A quarter (26 per cent) said their firms were using them to make decisions.
How is the advice industry already using AI?
In September, digital mortgage broker Tembo announced it had developed an internal, AI-driven mortgage criteria tool.
The tool, named Tembo AI, was developed in-house and uses criteria from more than 30 lenders, content from the broker’s website, as well as data from interactions with clients and lenders to provide answers to mortgage-related questions.
According to Tembo, the tool can answer general questions, such as what a joint borrower sole proprietor mortgage is, and specific criteria-related questions on a lender’s maximum loan-to-value, for example.
Tembo’s chief technology officer Geoff Wright says the firm’s aim was to reduce the amount of time that staff spend on answering complex questions.
“[It has] the ability to drill down further still into the answers, matching the cognitive process an operator goes through as they seek to find an answer to their question,” he continues.
“For example, ‘What’s [the lender’s] maximum LTV? Is that the same for flats and houses? In all regions?’
“Given we’re in a regulated space, we’re hyper-focused on the importance of getting the right answer,” Wright adds. “So the AI is trained to only respond when it has a high confidence it is correct, declining to answer if it does not have this confidence.
“As an added fail-safe, Tembo AI shows you its workings out, allowing human operators to validate how it arrived at its answer.”
The tool is a large language processing neural network, explains Wright, and relies on multiple types of machine learning, including natural language processing and deep learning.
“Natural language processing allows computers to understand, interpret and respond to human language; and deep learning enables computers to learn patterns and representations from large datasets.”
While Tembo AI is currently an internal tool, Wright says the firm will make it publicly available after significant road-testing. “Our focus is on expanding the types of questions that can be asked and the quality of answer returned,” he adds.
Another firm that has incorporated machine learning into its technology is AdviceBridge, an automated digital retirement advice and guidance firm for financial planners.
“AdviceBridge was founded on the premise of using AI to improve financial advice,” says Bruce Ely-Johnston, chief commercial officer.
