The Future: Artificial Intelligence and the Banking Industry

Artificial Intelligence is initiated when machines/computers acquire and then apply selected human knowledge and skills. The process when a machine imitates a human by autonomous reasoning is Artificial Intelligence. Computers are tailored to execute multiple functions including Learning, Perception, Planning, Problem Solving, Reasoning and Speech Recognition in addition to the capacity of managing objects. AI focuses on building smart machines that behave like humans. Many of us utilize Artificial intelligence, in some capacity, daily.

Banking is essential to the financial world and is considered a critical component to the world economy since it manages cash, credit and loan transactions. Banks are moving towards helping customers to track their debits and credits while promoting saving more money and gain better interest rates. This assistance allows banks to provide the growth of large enterprises. Because banking plays this major role in the world’s economy, every transaction that is processed through the banks must be documented correctly. Banks primarily leverage computers for each transaction record in a secured database. With the global banking system connected, each transaction can be tracked and communicated from any part of the world. Banking operations around the world are managed through a vast array of integrated networks. This is a direct result of implementing Artificial intelligence.

See also: Winning the Race to Innovation in Banking Technology

The Benefits of Artificial Intelligence in the Banking Industry

Artificial Intelligence is currently used in banking in a variety of ways to improve the overall customer experience.

Customer Satisfaction

Customer satisfaction is the most important factor of all banks. Banks offer enhanced personal services to all customers. Artificial intelligence increases revenue promotes faster decisions and achieves improved customer relationships. It also assists with improvements to back-office operations.

Artificial Intelligence is a critical requirement in banking. Machine Learning in banking interacts with bank employees, by helping them with making decisions and promoting the customer experience. AI allows the banking industry to gain perspectives into a customer and ensures that the customer is pleased with the banking services and better understand how the customer expects value from banks.

Accenture has reported that AI will become the primary channel through which financial institutions and their clients will interact in the future. This prediction is a reality thanks to organizations that are developing chatbots that enable bank customers to chat with their banks.

To enhance the customer experience, AI is expected to play a part in sales by recommending financial products. Today, Robo-advisors recommend account changes and by enabling machine learning can recommend insurance plans, deposit accounts, and credit cards.

As the AI journey continues, technology plays a critical role in reinventing banking by making it easier for banks to analyze customer risks and behaviors to predict fraud.

Chatbots

Chatbots, an automated chat program, executes routines and follows a pre-defined script. This is a way of implementing Artificial Intelligence as robotics in the banking industry. Since many people are extremely busy with daily activities it becomes impossible for them to physically visit their bank. When people are available banks are closed. Money is required 24 hours a day 7 days each week. This is when chatbots can assist and provide effective and efficient customer service by helping customers with their transaction details as well as additional services.

By implementing chatbots, banks are capable of understanding each customer’s unique needs and then reward them with premium offers.

Fraud Detection

The amount of data and volume transactions in the banking industry enables the need for Artificial Intelligence. Banking can leverage AI to transform existing processes, improve services and recommend a variety of financial products.

Bank fraud is feared by both customers and bank employees. With bank fraud, individuals find it difficult to understand what occurred and attempt to recover from their financial losses. When there is a fraud transaction identified and it is brought to the attention of the bank, the bank quickly takes the required actions to address the fraud. The rapid response by the bank assists customers by sustaining their trust with the bank and the bank then retains their customers.

The immediate actions followed by banks are a direct result of Artificial intelligence. Artificial Intelligence enables detection and minimizes fraud. AI gets more intelligent each and everyday and empowers machine learning. Fraud is captured by scanning through transactional data and identifying irregularities and patterns in transactions pointing towards fraudulent, money-laundering, and possible terrorist activities. Artificial Intelligence enables banks to identify fraud and prevent security breaches.

Machine learning and data analysis scrutinize all data AI maintains on customer transactions and compares this data against public information to flag suspicious activity. Future security is requiring biometrics, facial recognition, voice recognition to provide more protection to bank customers building trust and creating a more secure banking environment.

The Pros and Cons of AI in Banking

Pros

Implementing AI in banking has many benefits. These include accuracy, error and cost reduction. Activities with AI will become easier with data analytics. Machine Learning processes data rapidly. The customer patterns observed enhance customer service. Bank customers, at the right time, can be approached with the right product.

A Faster and More Efficient Customer Service

AI analyzes data and delivers information at incredible speeds that eliminate wait times and delivers the right solutions for customers. It also makes customer service representatives more efficient since they are empowered with information allowing the simplest of requests handled independently.

A More Personalized Experience

A bank’s interactions with its customers have grown and evolved. Web-based transactions and voice recognition are now the new norms. Trends such as this are expected to continue well into the future. By leveraging automated technology for customers it helps better personalize each interaction. AI simplifies user interfaces by personalizing them based on the user’s previous experiences.

Chatbots can deliver more personalized customer interactions based on their understanding (AI) by offering personalized financial advice.

Operational Efficiency

AI offers direct insights by creating improvements to existing processes, make better decisions and increasing profits through Predictive Analytics and Machine Learning. This will then allow customer service representatives to attend to more value-added tasks. As automation advances, AI is growing.

Targeted Marketing Campaigns

Bulk promotions and emails DO NOT work for today’s banking customers. AI and predictive analytics allow banks to design targeted promotions and marketing campaigns created for each customer individually based on their history with the bank. AI helps achieve marketing campaign success by identifying customer behavioral patterns.

Safety and Security

AI prevents money laundering and fraud by identifying patterns and flagging irregularities. The study of complex relationships between customer behaviors and unusual patterns, Machine Learning, Predictive Analytics (AI) and other statistics can predict bank fraud before it takes place.

Read also: Mobile payment security. What should developers know about it?

Cons

Customers are still uncertain about using AI for banking. There are misconceptions around risks. This is very similar to initial hesitations with “the cloud”, where in-house databases were considered safer than data on “the cloud”. Today we acknowledge that “the cloud” is as secure as your data behind a firewall. Further education regarding AI should suppress any recurring doubts over the security and safety of bank data.

Look for Major Changes in Banking over the Next 3-5 Years

AI is here. We are in the process of entering into the next chapter of digital banking. Implementing (AI) technology independently won’t allow for success. To improve this process all organizations need to emphasize top-down corporate culture as well as the technology.

Transformation in banking is accelerated with new technologies. Look for major changes in banking over the next 3-5 years. Cryptographic Keys and Personal Biometrics that will enhance safety and security for banks. Mobile Banking allows you to do your banking without driving to a traditional brick and mortar branch, making it much easier giving you more time back in your day. Should you go to a branch, you will receive a much-improved customer experience.

Artificial Intelligence (AI) is the current technology to move into the digital transformation of the FinTech space. Potentially this technology can reduce costs, deliver human and fundamental efficiencies, enhance the overall customer experience, promotes customer loyalty and increases financial returns.

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