In most traditional financial services (FS) companies, change is often a slow, daunting process.

The roots of legacy processes and systems run deep. Risk takes a painstakingly conservative approach, and the stringent regulatory environment can feel like dodging bullets in The Matrix. All of these roadblocks add up to traditional FS organisations typically resisting any technological transformations that might rock the boat.

Enter artificial intelligence (AI) – just one of the many ways these established FS companies can embrace innovation and stay competitive.

So why the resistance?

Let’s explore how conventional FS companies can overcome this resistance to change and effectively integrate AI into their processes.

Facing up to financial services challenges

To understand why traditional FS companies are so resistant to changes like embracing AI, it’s vital to understand their unique problems.

Firstly, they need to get buy-in from senior leadership. That’s often difficult, with the perceived risks associated with AI like data security, compliance concerns and potential job displacement. Leaders might be reluctant to shift away from the established processes that have earned them success over many decades.

Secondly, many conventional FS companies often operate with outdated, restrictive legacy systems – not easily compatible with modern technologies. This makes AI difficult to adopt without significant, costly and time-consuming overhauls.

Lastly, there’s how risk-averse many long-established FS companies are. AI – which requires new ways of thinking and a willingness to experiment – can often feel intimidating, and completely at odds with how these FS companies usually operate.

Start small and mighty

So with these three major factors looming over them, what can traditional FS companies do to overcome this resistance to change?

One key strategy is to start small.

Instead of attempting a gigantic overhaul, FS companies can choose small transformational projects that focus on implementing AI in a targeted way to achieve big impacts quickly.

For example, AI-driven chatbots can be used in customer service to handle common questions, freeing up the team to tackle more complex issues. This boosts efficiency and improves the customer experience, without that significant upfront investment.

It’s not just customer-facing roles either. Behind the scenes, some insurance companies now use AI as part of their underwriting process, saving colleagues the common bugbear of paperwork and saving money by bypassing a common bottleneck.

Smaller projects also give established FS companies the blueprint for future initiatives, showing that AI can be integrated without disrupting current operations.

These smaller projects are also agile enough to allow incremental improvements – without getting bogged down in risk aversion and the usual long-winded approval processes that stifle innovation.

Use AI as a catalyst for innovation

Integrating AI successfully into traditional FS companies involves spotting areas where AI can:

• Make a tangible difference
• Be integrated easily
• Boost people’s speed and effectiveness

One promising area for AI integration in established FS companies is identity verification. A recent Juniper Research study estimated that banks using AI for identity checks will save $900 million by 2028, as well as 29 million digital onboarding hours (compared to exclusively using humans).

AI goes one step further when it comes to fraud detection and prevention. Some FS companies are using AI and machine learning (ML) to analyse huge volumes of transaction data in real time – from transaction history to location data and user behaviour – to spot patterns and anomalies pointing to fraudulent activity.

This AI-driven approach to financial fraud detection is estimated to save a whopping $10.4 billion globally by 2027, a growth of 285% from 2022’s figures.

Embrace the bottom-up revolution

Let’s face it – AI is ubiquitous across almost every industry around the world. Powering everything from spell checks to productivity tools, AI quietly ticks away in the background to help you get work done.

FS is no different.

One report by UK Finance found that, of those surveyed in FS firms, 90% already deploy AI for routine tasks to save time and costs.

The key takeaway here? Individuals are already adopting AI in their processes, leaving the wider organisation behind.

While this is great for progress, it can also lead to security and data privacy issues for the traditional firms who are left behind.

Ultimately, these firms need to catch up before they’re caught out.

This grassroots, “bottom-up” adoption is a powerful indicator of AI’s potential. It helps teams to spearhead and source AI solutions that address their specific practical needs, while also allowing them to test and iterate their AI applications quickly.

(It’s also another reason why long-established FS companies need to build AI policies into their everyday processes.)

So how can these FS companies harness that momentum?

By encouraging innovation from the ground up, while also giving clear guidelines on how teams can use AI ethically and effectively. This involves creating an AI strategy that:

• Aligns with the company’s overall business goals
• Provides training and resources to upskill employees
• Establishes a governance framework to manage the risks of adopting AI

AI is now or never for traditional financial services

When it comes to implementing AI in established FS companies, the benefits far outweigh the challenges – if done wisely.

One wrong move, and the impacts can be catastrophic. That makes it vital to tread carefully between ingenuity and common sense when implementing AI.

Choosing small high-impact projects, finding key areas where AI can make the biggest differences and using a bottom-up approach to innovation, traditional FS companies can overcome resistance to change and pave the way for a more agile, competitive future.

Remember: AI today is as bad as it’ll ever be. So FS companies need to adapt and integrate these technologies early doors as AI evolves to give them a sharper edge over their competitors.

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