AI continues back-office expansion, as BofA Merrill unveils “Intelligent Receivables”

Maria Nikolova

Intelligent Receivables uses AI and other software aiming to help companies improve their straight-through reconciliation of incoming payments.

Artificial intelligence (AI) solutions have been steadily advancing in the financial services sector and the area which seems to be affected most markedly by these advancements is the back-office of big financial companies like banks, insurers and major FX dealers.

The latest example is provided by Bank of America Merrill Lynch, the global banking business brand of Bank of America Corp (NYSE:BAC), which on Tuesday announced the adoption of a new solution that uses artificial intelligence (AI). The solution, called Intelligent Receivables, is powered by fintech company HighRadius and seeks to free bank staff of the tedious task of matching incoming payments with invoices.

In particular, the AI-based solution:

  • Identifies payers and associates their payments to remittances that are received separately.
  • Extracts remittance data from emails, email attachments, electronic data interchange (EDI) and payer web portals.
  • Matches payments to open receivables using the enriched remittance data.
  • Creates a receivables posting file that the client uploads to their ERP system.

The solution brings with it the advantages of reducing time and costs, as well as eliminating some of the workload for human staff. Will human employees be needed given the deployment of the new AI solution? Apparently, yes, as there are some cases where automatic invoice matching is impossible. If this happens, an exception portal allows the receivables staff to upload supporting data or make other adjustments to enable matching.

The Intelligent Receivables solution is currently available in the United States and Canada. But BofA Merrill says it will be rolled out in other countries and regions later in 2017.

This development underlines the trend of AI pushing further in certain roles in financial services firms. Whereas BofA Merrill’s announcement did not mention anything about a risk to the human workforce due to AI adoption, it is apparent that the labour market is changing due to the swift advancements of AI solutions.

Marty Chavez of Goldman Sachs has explained earlier this year that automated trading programs have taken over the bigger part of the work performed by human traders at the company’s US cash equities trading desk in New York. At present, he said, there are only 2 equity traders working at this desk, compared to 600 traders in 2000. Mr Chavez has forecast that currency trading and certain parts of investment banking will follow suit.

Nomura Research Institute has recently compared human stock pickers and AI solutions trying to do the same. Computers are taking over investment decisions of a month to a year and are now doing better for investments spanning two to three years, where human-devised strategies used to have an edge, according to Nomura. The last hope for human staff appears to be the time horizon of five years or longer.

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