Artificial Intelligence is the present, and future of technology. With the fast paced environment and increasing demands, banks are trying to fulfill the huge volume while offering better service and products that best suit their clients. To cover all the measures faster and cost effectively they have been truing to AI.
Since necessity is the mother of invention, banks are now finding solace in modern technologies. For instance, blockchain and AI to meet customer demands and cope up with the fast paced environment.
With the seismic revolution made by AI technology, the banking sector and financial companies are redefining the way they work, innovate their services. And enhance their performance.
The MIT sloan review has evaluated that almost 85% of business decision-makers believe that AI will provide an advantage or sustain a competitive advantage to businesses in the future.
According to Accenture, ‘By enabling machines to interact more naturally with the environment, with data and people, the technology can also extend the capabilities of both machines and humans far ahead than what each one can do by themselves.’
Reasons why banks are keen on adapting AI services and applications
The banking industry is rapidly making use of AI to expand its gamut of services especially the customer experience segment.
According to a survey by National Business Research Institute and Narrative science, 32% of the financial institutes utilize Artificial Intelligence through predictive analysis and voice recognition.
Some reasons for an increased adoption of AI are listed below:
- Push for process-driven services
- Ever-increasing competition in the banking industry
- Customers demand to get more customized solutions
- Enhance employee efficiency
- Introduction of self-services at banks
- Creating operational efficiencies
- Focus more on compliance and profitability
- Minimize fraud and security risks
- Implementing human work by employing the use of software robotics
- Bring in effective decision making
- Manage large volumes of data at record speed and derive valuable insights
Apart from these, AI is changing the banking industry by personalizing customer experience and fueling revenue growth with better-targeted offerings.
According to Accenture’s survey of 1,300 workers, 61% believe that AI will improve their work and make it interesting, while 67% believe that it will generate new opportunities. 88% are confident regarding their ability and skills to work with AI, while 75% aspire to develop the required skills for AI.
Areas where the implementation of AI is changing the banking industry
1. Fraud and cybersecurity
AI has changed the cybersecurity game. With the help of AI, banks are deploying machine learning, deep learning and predictive analysis to observe real-time transactions and mitigate the fraud. These technologies help scan transactions for suspicious patterns and assess customers for credit worthiness.
2. Risk management
It is a known fact that risk grows as volume and complexity increases. As banks become more prominent, the quotient of risk also becomes more significant. AI is helping banks, through their under-resourced security analysts, to stay aware and define risk management more securely.
3. Business process management
With the help of AI, banks can cut, and get rid of time-consuming tasks such as research, data collection, and data entry. The saved time is used to curare a better management process, and work at making critical decisions that add more value.
4. Credit Assessment
Lending is never easy, and yet it’s the way the banks make money. Validation of and individual’s creditworthiness, or even that if a business pursuing a loan, is critical. AI helps in this situation by collecting data of the borrower, profiling them and measuring their risk levels from internal and public data. Banks depend on this data to finalize and take it to a logical decision
5. Marketing & Sales
AI for some time now has been used to gather the relevant insights and data, which is used as reasoning to build stronger relationships with the customers. Detailed profiles, segmentation, spending trends and more are analyzed to give tangible insights that bankers need to understand their customers better and make offers more attractive. The best part is that the analytical results are available in almost real time.
6. Improved customer experience
AI has led to a better understanding of customers and their behavior. It enables banks to customize services and financial products by adding customized features to provide meaningful customer engagement that builds better customer relationships.
Changing banking operations by using AI to strengthen competitiveness
1. Prediction of the potential outcomes and trends
As AI predicts future scenarios by analyzing past behaviors, it helps banks predict future results and trends based on different models. It also helps the bank identify fraud, detecting money laundering trends, and making customer recommendations. With Machine Learning, the AI keeps improving the identification of actions that are usually hidden to the un-trained eye, helping them save a lot of money.
2. Cognitive process automation
With this feature, banks can enable automation of a variety of information-intensive, costly, and error-prone banking services, including claim management. It reduces costs and also ensures quick processing of services at all steps, and secures ROI.
3. Effective decision making
AI systems respond like human experts and provide solutions or options in real-time, based on analyzed data. These systems also keep a repository of the information in the database that it ‘refers’ back to when it sees similar trends and giving suggestions based on previous human interactions that qualify the quality of output
The Bright Future
The evolution of technology is making banks focus on leveraging AI based technology platforms. Analyzing vast amounts of unstructured data is not a big deal for AI. But it needs time, training and a strong association with humans to learn and achieve the best possible result.