Customer experience is taking a center stage for every organization irrespective of its size and nature of business. The story is no different for banks. Banks and other financial institutions, being massive conglomerates comprising of multiple lines of businesses (retail lending, corporate lending, trade finance, etc.) often struggle in maintaining a personal touch when interacting with customers. With the rise of online and mobile banking, banks run the risk of losing even more opportunities to create a face-to-face connection with their clients.
With the emergence of artificial intelligence (AI), banks are finding new and innovative ways to engage with their customers individually and deliver personalized services.
The State of Artificial Intelligence
Worldwide, banks are moving towards establishing or growing their AI-based operations. In fact, “52% of financial services industry executives are currently making ‘substantial’ investments in artificial intelligence, and 72% of business decision makers believe that AI will be the business advantage of the future .”
AI in Banking
AI has a myriad of potential uses, however, within the banking sector there are five main areas in which AI is projected to spur significant business transformations:
1. Customer Service and Engagement
Every industry is moving rapidly towards a customer-centric business model. Banking, where the money is involved, the individualized experience is even more important. Since the advent of mobile banking, financial institutions have been striving to build deep and personal relationships with their customers. AI is the gateway to bridging the connectivity gap between financial institutions and their millions of clients.
AI enables banks to get to know their customers by aggregating thousands of data points on each customer. Using AI and machine learning-powered analytics tools to cater to their customers’ preferences, demographics, and specific needs. The “Know Your Customer” portion of banking is no longer a formality with AI, but rather a comprehensive picture of the customer and their nuanced requirements from a financial institution. This profiling further helps in cross-selling and upselling to the prospect base.
2. Security and Fraud Detection
It is a universal truth that the better you know your customer, the easier it is to identify fraudulent activity and security breaches across their bank accounts. As technology continues to evolve, security risks and fraud are an ever-present foe within the banking industry. AI and machine learning give banks the tools to detect and combat security risks and fraud, enact more effective user authentication, and free up human workers to focus on ad hoc security cases.
3. Mobile Banking
The entire premise of mobile banking has always been to bring banking operations to customers as and when they require. Mobile banking processes, powered by AI, allow customers to complete whole banking transactions without interacting with an actual human—this enables banks to offer truly round-the-clock services.
AI also streamlines the mobile banking process by retaining customer data and preferences. With AI as a supporting player, mobile banking can truly shine as a platform for personalized and convenient 24/7 banking.
4. Algorithmic Trading and Risk Management
Within the banking sector, one of the oldest continued uses for AI has been algorithmic trading and risk management. By crunching numbers at exponentially higher volumes than any human, AI and machine learning have solidified their place as essential tools to traders and financial managers.
Financial institutions are now able to predict thousands of possible outcomes, calculate their probabilities, and make decisions based on an aggregate of millions of data points. No matter how good the bank is, without AI, this level of predictive accuracy could be challenging.
5. Chatbots and Other Bots
One of the most radical ways in which AI has revolutionized the banking industry can be seen in the ubiquity of chatbots. These AI and machine learning-driven bots, available on almost every online and mobile banking platform, can mimic human sentiments and responses, serving customers anytime and anywhere without losing the human touch.
The Bottom Line of AI and Banking
Perhaps the most significant effect of AI implementation within financial institutions is the bottom line in terms of revenue. According to research conducted by Autonomous Next, “the aggregate potential cost savings for banks from AI applications is estimated at $447 billion by 2023.” And banks around the world, big and small, recognize the potential impact of AI implementation on their bottom line in the coming years.
While the banking operations of the future may not revolve around in-person connections, there is strong evidence that AI-supported banking will soon grow to be more personalized and customer-centric than ever before. AI is the ultimate gamechanger of the present and the prerequisite of the future—so, get artificially intelligent and step into the future of banking!
Ritesh Varma(Global Head: Business Solutions) Newgen Software