Whether it's Google’s DeepMind defeating humans at the notoriously complex game Go, Burberry fighting fashion fraud, law firms using automated contract and document reviews, or IBM using a supercomputer to defeat chess champion Garry Kasparov, artificial intelligence (AI) has already had a huge impact on myriad industries. It’s about time the pensions industry also harnessed the potential of this technology.
Personalisation breeds engagement
In today's fast-paced life, many people (especially Millennials) focus on the here and now. With long-term saving for retirement often at the back of their minds, a personalised approach to communication is key.
AI has already shown how personalisation can engage people more effectively in the entertainment industry. In May 2016, Netflix announced the development of workflow management and scheduling application Meson to manage its various machine learning pipelines that build, train and validate personalisation algorithms responsible for providing viewing recommendations. If this kind of AI application can be used for people’s preferences in television, why can’t it be used to help guide people to suitable pensions saving solutions?
If the pensions industry was able to take the data people input around their current financial situation and their future goals and aspirations, and offer them a tailor-made savings plan to help them achieve these goals, that could really make a difference to engagement levels.
The juice is worth the squeeze
Though in relative infancy, the recent history of AI shows that there will need to be significant investment to fully realise the possibilities machine learning can offer. Maximising the benefits will require both patience and a willingness to experiment with ways the technology can be harnessed most effectively.
Any innovations the pensions industry embraces in the area of personal savings may therefore need a fairly long lead time to fully realise the benefits for employees and employers. But this shouldn’t be a barrier to entry. Advances in voice recognition software, such as Siri and Alexa, show that the sooner the industry gets started the sooner we will see the results filter through to better outcomes (in our case for pension scheme members and long-term retirement savers).
There are already some instances where AI is being used to address the growing need for savings advice. For example, Swedish online investment company Nordnet experimented with using a chatbot called Amelia to act as a customer service agent. Amelia was able to answer some of the simpler queries people had and could learn the correct response from her human compatriots when unable to answer more complex questions. Unfortunately she was recently fired because of her ‘underwhelming performance’.
More work needs to be done to improve these processes, but it’s time to begin the journey towards fully embracing AI in the UK pensions industry – to achieve better outcomes for members and savers.
Dipa Mistry Kandola is head of flexible benefits at LCP