Looking Ahead: AI and the Future of the Financial Services Customer Journey
Artificial intelligence (AI) is becoming an increasingly embedded feature of day-to-day life, notably within the financial services sector. AI is now shaping how customers are onboarded, assessed, supported, and transacted with. As firms look ahead, the question is no longer whether AI will be used in customer-facing processes, but rather how it can be utilized in a way that is both commercially effective and regulatorily sound.
Current Landscape of AI in Financial Services
Across banking, consumer credit, fintech, and insurance, firms are actively exploring the use of AI to drive efficiency and enhance customer experience. Common applications include:
- Affordability and credit risk assessments
- Fraud detection and investigations
- Automated claims handling
- Payment monitoring
- Personalized customer support
When implemented effectively, these tools can reduce friction, improve efficiency, and allow firms to respond more dynamically to customer needs.
Regulatory Awareness
Regulators are acutely aware of this shift. A 2024 joint survey by the Bank of England and the Financial Conduct Authority (FCA) found that around 75% of UK financial services firms already use AI, with a further 10% planning to do so in the next three years. The FCA’s approach to AI remains principles-based, focusing on outcomes consistent with its broader regulatory framework.
Obligations and Accountability
The use of AI does not dilute existing regulatory obligations. Under the Consumer Duty, AI-enabled customer journeys must still deliver good outcomes. Firms are responsible for ensuring that products and services meet customer needs, offer fair value, and that communications are clear.
Understanding AI Models
Before integrating AI into customer journeys, it is important to distinguish between different types of AI models:
- Predictive AI: Analyzes large volumes of data to identify patterns and make predictions, used in fraud detection and risk assessments.
- Language-based AI: Interacts with customers via text or voice, enhancing customer service through chatbots and virtual assistants.
- Agentic AI: Capable of making recommendations and taking actions on behalf of users, such as approving loan decisions.
AI Use Cases in the Customer Journey
AI has potential applications across various areas of the customer journey:
- Affordability and onboarding: AI analyzes customer data to produce quicker assessments of creditworthiness.
- Payments and transaction execution: AI monitors transactions for real-time fraud detection, improving efficiency.
- Claims handling: AI speeds up the claims process, enhancing customer satisfaction.
- Customer support and advice: AI analyzes customer behavior to provide tailored support and identify vulnerability.
Key Considerations and Risks
While AI has the potential to improve customer experiences, it must operate within existing regulatory frameworks. The Consumer Duty remains a central consideration, as firms are accountable for customer outcomes regardless of whether decisions are made by humans or AI.
Risks include:
- Bias and fairness: AI models may inadvertently reflect biases from historical data, leading to discriminatory outcomes.
- Vulnerability and safeguards: AI systems must operate sensitively to avoid harm to vulnerable customers.
- Monitoring and model management: Continuous oversight is essential to adapt to changing data inputs and ensure compliance.
Strategic Integration and Governance
Firms should consider various issues when deploying AI tools, including:
- The nature of the customer journey and relevant regulatory requirements.
- Impact on the target market and necessary safeguards.
- Monitoring output metrics and establishing clear governance structures.
Looking Ahead
The FCA has adopted a principles-based approach to AI, expecting firms to apply existing regulatory frameworks to AI technologies. As AI becomes more embedded, firms should anticipate increased regulatory scrutiny, particularly concerning fairness and customer outcomes.
Firms considering innovative AI applications are encouraged to engage with the FCA early to identify potential regulatory concerns. By doing so, they can navigate the complex landscape of AI in financial services while ensuring compliance and delivering positive customer experiences.
