AI for the Banking Sector – An Inescapable Reality
Artificial intelligence (AI) is among the top priorities in a range of emerging technologies that are being used across the financial services industry. If we take a bird’s eye view of the retail banking market currently, we will find that the customer is at the heart of all digital transformation projects that are currently being undertaken. Understanding the needs of the customer and meeting it, even in anticipation, is the need of the hour.
Banks currently hold a wealth of unstructured data that can be utilized by a host of AI solutions such as chatbots and process automation technology as well as personalized interfaces that are powered by open APIs. No doubt, there are challenges to overcome, such as dealing with legacy systems, or making the migration to the cloud, as well as security and safety concerns. However, banks recognize the need to make the move and are working towards incorporating new ways of embracing these technologies.
AI is going to work in a huge way to transform the way customers and banks interact. The Accenture Banking Technology Vision 2017 shows that 78% bankers strongly believe that AI enabled user interfaces will be instrumental in creating customer experiences that are human-like. There is a strong belief that AI will revolutionize the way banks collect their information and then use it.
So what are the benefits of digital transformation aiding the implementation of artificial intelligence in the banking sector?
Digital solutions are already in place while interacting with banking customers. The next stage is to bring in the power of AI to customize these interactions. With a better hold on customer requirements, operational efficiencies can be made better. It is at this stage that virtual assistants and personalized customer interfaces as well as robotic process automation can come in and help banks make the digital transition smooth. Once protocols are in place, AI in banking will work in these key sectors of functioning:
Automation: Routine operations may be automated, freeing up human man hours to do other more important tasks. Categorization of complaints can be done through AI, ensuring critical issues are addressed immediately. Such categorization can also help in something as mundane as prioritizing customers in the service line. Scanning and clearing paperwork is another sector where AI can get the job done quicker. This works well to free up human personnel, especially during year endings and IPO launches.
Chatbots: Currently used as virtual assistants, AI can ensure that things are taken a step further where they can interact with customers on near human level. This can be in managing queries, expediting requests and collecting data that can be used to create recognizable customer behaviour patterns. Currently a hybrid model that combines humans and chatbots is being used.
Managing Risk, Handling Fraud: AI is perhaps the best means of sorting through massive amounts of data amassed in daily transactions to be able to detect the possibilities of fraud. With evaluation of large swathes of data being done in a matter of seconds, flagging a potential risk or managing a tendency toward fraud will become much easier. With AI, companies, especially banking, can keep up in terms of sophistication of fraudsters.
Banking as a Platform (BaaP) is among the top drivers of digital transformation in the banking industry. With its use of open APIs BaaP can help in enhancing customer and banking relationships. In fact, here are two important strategies to this end.
- Standards and best practices: Incorporating digital transformation into an organization is not easy. Banking, with its varied sectors can be a hierarchical nightmare to work with; however, it is not impossible if you break things down into smaller, implementable strategies. Having the best standards and processes for each department chalked out and implemented, along with checks and measures, ensures you have a seamless platform to begin with. From there, digitization is just another building block that becomes easier to accept.
- The digital core: Consolidation of data that is acquired from all the various sources of banking personnel will help to arrive at some real-time insights that can be relied on to make some good operations and finance based decisions for the banking sector. The benefits cut across sectors and are tangible.
For any banking and finance organization to remain relevant and competitive, there is no hiding from digitization and AI. Early adoption is the key. And not doing so soon enough can result in losing a sizable chunk of the market to competitors who are already way ahead in the game. AI is definitely the key differentiator here and businesses will need to make concentrated efforts to implement, scale and work these strategies to create better customer experiences and forge better, co-dependent partnerships within the financial sector.