The ABA and CTBC webinar on “Current State and Future of AI Empowering Financial Services” held on June 20, 2024 gathered over 700 registrants from 40 countries.

Moderated by Mr. Austin Chiang, Chairman of the ABA Policy Advocacy Committee and Chief Strategy Officer at CTBC Bank, the 60-minute session featured expert technology practitioner Mr. Friedman Wang, Executive Vice President at CTBC Bank.

 

SUMMARY

 

Friedman started his presentation by describing how the initial digital transformation launched years back is today ushering an AI driven financial era. He pointed out that as leader in Taiwan’s financial industry, CTBC aims to use AI to strengthen its financial operation in Asia since 37% of its profits originate overseas.

Friedman then proceeded to focus his presentation on the following: (1) Perspective and impact of AI on the financial industry, and (2) CTBC experience in AI.

 

(1) Perspective and Impact of AI on the financial industry

According to Friedman, AI brought a paradigm shift in financial operations. Throughout history, technology has brought fundamental changes. Today, AI has created a transformative era of innovation as it is expected to expand boundaries in financial markets.

The shift has accelerated in the last three decades in three major steps: (1) In 1997 the Internet arrived with Netscape; (2) The Internet allowed customers to bank remotely, especially in 2007 when mobile phones busted into the consumer market; and (3) In 2017, digital technology entered the banking market, setting up the AI foundations.

Friedman said that the financial industry was the first sector to be most impacted by the AI wave for two reasons: (1) Financial industry is easily disrupted by new technologies, and (2) the financial service industry is data-intensive.

Friedman argued that as AI becomes smarter and faster, information will be used more efficiently, impacting financial decisions more positively.

 

 

 

(2) CTBC experience in AI

Concerning CTBC experience in adopting AI, Friedman categorizes the process in three layers: (1) Business risk, (2) Technical risk, and (3) Practical applications.

The first layer is Business risk which by now has been probably fully established, yet early adopters have not achieved significant breakthroughs because probably, Friedman argued, the supply side of technology and the demand side of the business model are still not aligned. However, he said that time will solve this misalignment.

The second layer is Technical risk which includes the challenges of developing and deploying AI. This layer impacts the bottom line as R&D investment requires materials, expertise and regular testing.

The third layer is Practical application which comprises potential misuse of AI or unintended consequences. Friedman explained that CTBC has established ethical guidelines and oversight to ensure responsible AI usage. These measures include regulating compliant risk, too.

However, Friedman added a fourth layer in the AI process: Culture and Organizational challenges that bring impediments to AI implementation.

According to Friedman, the financial industry is human-centered, thus culture plays an important role.

Friedman briefly explained the evolutionary aspect of AI in their financial culture. He said that the pace of change started in 2016 when CTBC began its digital journey. That was its AI 1.0 which was mostly a collaboration between human and machine.

A couple of years later, CTBC entered into AI 2.0. This stage brought the expansion of AI usage with new scalable solutions. This version of AI was based on the human machine code creation.

Then in 2022, CTBC started its AI 3.0 where it is not about implementing AI but about solving complex operations. CTBC has been trying to integrate multiple AI technologies to solve complex operations.

In this stage, Friedman recognized that there are three key issues to overcome:

(1) AI value is still unrecognized. He argues for the necessity to find the right scenario where time is saved and value is improved.

(2) AI Impact is quite limited because people are unfamiliar with it.

(3) There is still lack of data to make application robust, since much more data is needed to improve accuracy.

He said that one way to create value is to develop key technologies in large marketing, verification technology, data technology, etc.  Other ways to create AI efficiency is using risk management in regulatory areas as well as in predictive algorithms in stock price performance. In corporate banking, AI could help manage documentation processes more efficiently.

In the final part of his presentation, Friedman said that the CTBC experience in AI is trying to achieve three major things:

First, CTBC uses the new AI to reinvent the employee working model. CTBC is trying to leverage AI for internal tasks, such as people reading, translating, writing reports and emails, taking minutes, etc. These tools will improve productivity and creativity, he said.

Second, CTBC is trying to rebuild the new service and the sales approach. CTBC is establishing a collaborative process between humans and machines. CTBC wants that AI agents provide critical service information and respond to inquiries promptly.

Third, CTBC is trying to use AI solution to rewrite the new customer interaction model with AI assistance.

The vision is to become AI-powered, to leverage the predictive and generative AI power to improve the customer experience and risk management.

“I think this is the heart of our transformation. We aim to directly engage with our customers through AI technology,” Friedman concluded.

A copy of Friedman’s presentation is available to ABA members only.

The video recording of the presentation can be viewed at the ABA YouTube channel HERE.