Why advisors are still a long way from embracing AI: Schwab
By Jeff Berman

Conversational artificial intelligence, natural language processing and voice could be the next disruptive technologies in the financial services industry, but there continue to be barriers to advisors and clients of theirs and other financial institutions accepting these technologies, according to Kyle Caffey, managing director of conversational AI at Charles Schwab, and Swapna Malekar, product lead at RBC.

“Financial use cases can be more complicated, and so delivering a good client experience could certainly be a part of that adoption barrier,” Caffey said last week while speaking during a “Future Focus” session at the Finovate Fall Digital online conference.

Another big issue is that “the nature of the data that we’re relying on and passing through some of these technologies is sensitive,” he said, underscoring the importance of risk management.

Schwab has been careful with privacy and the “security of our clients’ data as we pursue some of these technologies — and that’s something that we’ve been very mindful [of] as we’ve executed on our vision and road map, and it’s something for any financial services firm or bank that’s considering deploying conversational AI … to make sure they’re paying attention to,” he said.

In most cases, business use cases for technology are “built on either a revenue plan or an expense savings plan,” he noted, adding: “Certainly, conversational AI brings to bear capabilities on both sides of the business case.”

But Schwab “really started with the client experience and thought about ‘how do we make our digital ecosystem as accessible and simple for our clients [as possible] to get them what they’re looking to get done?’” One goal was to “better enable self-service,” he pointed out.

Like other speakers during the conference, he explained how AI can be used to deliver better personalization to clients.

A client “uses natural language and then, based on intent, there’s a curated response for that client, which certainly you can personalize and make really valuable for that specific client,” he said, adding: “That’s where we started and, of course, if you start there, you nail it. It’s going to move the needle on both sides of the business case: The revenue and the expense savings.”

However, during the Q&A, he told ThinkAdvisor: “I’d say, we’re early on in building the business case” when it comes to RIAs and other advisors, although Schwab has “absolutely looked at” potential use cases on the advisor side.

“Typically, the issues and the challenges on the advisor side tend to be a bit more complex and require a bit more hand-holding, but we still see a big opportunity to leverage intent recognition and kind of triage capabilities to make … support conversations more efficient when they’re handed off,” he said.

Trust and Data Still an Issue

When it comes to clients, there continue to be trust issues surrounding AI, according to RBC’s Malekar. Even if her bank offered virtual assistant functionality, she herself would be hesitant to use it, she told viewers.

“I still don’t feel comfortable in divulging my information and having an in-depth conversation” with that virtual assistant if applying for a loan or any complex transaction at her bank, she said, explaining: “I still want that face-to-face interaction with a real human being” in such cases.

However, “this trust will incrementally increase, I believe, in the next few years as these voice technologies become smarter and more intuitive, and the customer experience around it becomes much better,” she said.

During another conference panel, on Friday, industry executives discussed how shifting social demographics are driving transformational change in the financial sector.

Pointing to a recent industry report, April Rudin, CEO and founder of The Rudin Group, said: “It turns out that the highest appetite for digital is once again among ultra-high-net-worth baby boomers.”

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