- It is a well-known fact that AI-powered technology is getting integrated into everyday life through consumer products, but AI is also having a transformative effect on an industry that impacts virtually all consumers and businesses: banking. The influence of AI in banking is steadily growing across the whole banking landscape. Here are the ways in which AI is already transforming the banking industry.
Detecting Fraud And Preventing Cybersecurity Risks
Fraud costs banks and customers billions of dollars each year. If AI and machine learning can crackdown on the fraud and cybersecurity issue in banking, both customers and banks alike stand to benefit from it. The technology has always been there, and is only getting smarter. Banks can develop programs that can use deep learning and machine learning to better identify what kind of a transaction is unusual of a customer.
The advances in machine learning and deep neural pathways open new frontiers in fighting online fraud and cybercrime. There are newer algorithms being developed that are based on the way people think. While it all sounds like science fiction, technology that can study a customer’s spending patterns and adjudge if the present transaction being carried out is legit or fraudulent, is already in its developing phase and will soon be a reality.
Improved customer service
Customer service is an integral part of banking and other financial services for the foreseeable future, which is why machine learning is so important in this area.
Getting on the phone to resolve an issue with your bank can be a charade sometimes, and often, you still don’t get clear answers and then need to visit your bank in person. When it comes to providing customer service, banks could use AI to automate a number of tasks, create smarter self-service solutions, enable customers to resolve many of their issues on their own and when a bank personnel’s intervention is absolutely needed, data can enable the personnel to better help the customer. Needless to say, better AI powered customer service and self service solutions help banks keep costs down and save man hours.
Chatbots are a recent addition to a bank’s customer engagement arsenal. Lately, chatbots are becoming more sophisticated due to AI. Using AI to drive chatbots can help customers in availing queries and requests related to their accounts. These requests could range anywhere from transaction details, purchase history, balance enquiries, etc. AI chatbots are highly effective as customers can easily get all their required information instantly at any time. They don’t have to wait to talk to a customer service representative who may not have all the details at their disposal.
Budget spending advice
Eventually, AI will transform every one of these building blocks. Technology will make operations efficient enough that asset size, although still important, will no longer be sufficient on its own to build a successful business. As a result, competition to achieve scale of data flow-through will be more important to sustain cost advantages. Meanwhile, revenue will come not from standardization but from the highly customized products and personalized interactions that AI makes possible. Neither will exclusive relationships be a differentiator; in a digitised world, providers will be known for their ability to create well-matched connections. Customers will stay with an institution, not because it’s hard to walk away but because their benefits are better there than anywhere else. Process efficiency will result from the interplay of human and artificial strengths.
AI is reshaping the building blocks of success in financial services
From these new building blocks, an unfamiliar environment will appear, one that has been reassembled to:
- Deliver new kinds of value. Product and service innovation will lead to greater financial inclusion and a sleeker, more personalized customer experience.
- Reshape operating models. Financial institutions will become leaner, highly networked, and more specialized. They’ll also become more dependent on the capabilities of large technology players.
- Upend competitive dynamics. Data sharing will become critical to competitive success. The advantage will go to first movers and large-scale players in an increasingly bifurcated market.
- Take public policy into uncharted territory. AI will raise questions that challenge government and society, prompting the need for a new set of norms to protect humans, regulate machines, and remake the financial infrastructure. The result? A great upheaval—of capabilities, resources, relationships, and potential. Old bonds will break. New ones will form in unexpected ways. The centre of gravity will shift, and where it comes to rest depends on the choices that stakeholders make today.