Artificial Intelligence (AI) has been identified as the next technological frontier for banks as they look to leverage their investment in mobile to drive greater customer engagement.

Banks including Standard Chartered and Citi are developing AI solutions to assist with staff attrition and training, and reduce human error at all points in the engagement and transaction process.

Banking executives see potential in AI programs to fulfil the role of a virtual personal assistant, following the success of Apple’s Siri platform.

This insight emerged at FST Media’s 3rd Annual Technology and Innovation – the Future of Banking & Financial Services conference, held in Singapore last week. Melissa Wong, Head, Channel Operations and Customer Experience at Standard Chartered said “Zoe (Standard Chartered’s virtual agent) works 24/7, responds quickly, doesn’t get sick, won’t quit, follows rules and regulations and is multilingual. Her brain could sit behind every channel. Zoe is the ultimate private banking manager and we could provide her to the masses.”

Zoe joins vendor solutions, IBM’s Watson and SRI’s Lola as virtual assistant programs being developed specifically for banks. Citi recently announced a partnership with IBM to tailor Watson for its customers. Despite this interest in AI, Denise Montgomery, Research Director, Financial Services Technology at Ovum, says the strain that AI technology would put on systems means it will take some time before most banks are able to roll it out at scale.

“The big issue sitting under all this is banks are getting huge amounts of data, but they still haven’t got it terribly well organised. It’s a bit like the Ancient Mariner; water water everywhere but not a drop to drink,” says Montgomery.

However, she adds the potential for this technology to improve customer interaction justifies investment in it. “I think that we have the perfect storm. We have a large community that is getting used to AI, and being trained in it through non-banking applications. They’re learning how to properly interact with these things.”

Other key insights to emerge on the future of innovation were all related to mobile technology, and include the importance of alternative channels in developing markets, the power of social media and the potential for Near Field Communications (NFC).

Mobile technology is rapidly growing in importance in developing markets. To highlight this, Richard Harris, Head of Retail Bank at Vietnam International Bank showed that while the average GDP per person in Vietnam in 2012 is just $1,300, the country has a mobile internet use rate almost equivalent to Australia and China, which opens opportunities to reach out to the unbanked.

Social media also remains key for financial services in both developing and mature markets. Art Wichienchararoen, Senior Vice President, Head of Retail and SME E-Business at Kasikornbank outlined five ‘rules of thumb’ with regards to developing a social media presence: banks must listen, get involved, add value, be honest and transparent, and finally think long-term. Kasikornbank’s secret to social media success also lies with engaging with customers outside of financial services by linking to general interest stories, and running marketing campaigns with popular icons such as Hello Kitty.

Also linked to mobile technology, the NFC roll out through all the major telecommunications companies in Singapore has resulted in a technology that will prove disruptive to traditional financial services. Tang Eng Pheng, Senior Director, Industry Cluster Group of Infocomm Development Authority of Singapore (iDA) said that the business case for NFC was not just as a card replacement technology, but rather as an opportunity for financial services to add additional value to the customer. It opens new interaction channels such as peer-to-peer mode, and offers banks greater outreach and the opportunity to develop stronger relationships with customers.