Published by FirstAlign
AI has transformed nearly every industrial sector. In this digital age, traditional banks find themselves competing with highly technological FinTech players. To maintain their place of competition in the industry, banks need to embed artificial intelligence as an integral part of their industry. Banks today are struggling to reduce costs, meet ends, and fulfill customer expectations. AI benefits banks in various ways and will help them maintain their position in the competition.
AI will enable cost-saving methods, provide customer satisfaction through ChatBots, and use robotic automation of processes to achieve efficiency. Let us delve into the various ways in which AI benefits banks.
Enhanced customer service
One of the top priorities of banks worldwide is customer satisfaction. Banks provide a personalized and efficient service to every individual customer. Artificial Intelligence steps in and develops a better understanding of their customers. It analyzes their behavior and requirements through the user’s data. This enables banks to better understand their customers and their needs. Therefore, they are benefited with service that provides personalized financial products and features.
Using AI, a ChatBot can assist customers without the help of a customer service agent. Though customer care executives serve customers well, they have limitations of time and the number of people they can attend to in a day. ChatBots offers a solution to this problem and helps maintain a good relationship between banks and their customers.
In today’s world, online and mobile banking play a critical role in our lives. AI-powered mobile banking apps are often used by many as these apps meet the user’s expectations with personal and predictive services. Banks use ChatBots to enhance customer services and provide their users with their requirements throughout the day. A ChatBot can offer much more viable help to the user in comparison to manual phone calls. It can provide users with links to finish a particular process.
AI-powered ChatBots can act as an answering machine and can answer simple questions for users of a particular banking app and redirect them to the bank’s website if necessary. Basic operations such as opening or closing an account, transferring funds, etc. can be achieved with the help of ChatBots. With improvements in natural language processing, ChatBots are now capable of having smarter conversations which means that they can handle a variety of redundant customer support queries. This way, ChatBots reduce the workload of customer care executives significantly.
Reduction of bank operational costs
Despite the banking industry being largely digital in operation, there are still processes that are mainly carried out by humans. These processes are riddled with the potential for human error and are heavy with paperwork. Robotic process automation or RPA mimics rule-based digital tasks performed by humans. RPA in banking erases much of time-consuming and error-prone work. Especially work involved in entering customer data from contracts, forms, and other sources.
Banks can improve their risk management by replacing these human processes with AI-based automation. There is also room for them to impose audit and regulatory control. They are then free to focus their human resources on higher-value tasks such as client relationship management and customer service.
Financial fraud has serious repercussions and the affected individual will find it very difficult to recover from the losses. Fortunately, banks bring fraud transactions in a bank statement immediately to their attention. The bank authorities will step in and take necessary action in an organized manner. Artificial intelligence is the reason behind the speed of their response.
Artificial intelligence is able to detect and reduce banking fraud. It captures fraud by scanning through extensive transactional data and tracking down any unusual activities or inconsistent behavior patterns. This way, banks are able to detect fraud and protect security breaches with AI.
USAA invested in artificial intelligence to monitor fraud and derive means to prevent it. They are using AI to analyze how their customers are using their apps and the typical behavior patterns they display while using them. In this manner, AI is able to analyze patterns and detect any potential irregularities which occur when fraud is possibly taking place. Through these enhanced fraud prevention methods, the bank is able to save its customers on average of $100 million a year.
Better decision making for loans and credit
At present, many banks rely on the use of credit scores, credit history, banking transactions, and customer references to determine whether an individual or a company is creditworthy. Another way AI benefits banks is by providing AI-based systems to promote safer and profitable load and credit decisions. AI can provide a more accurate depiction of potential borrowers at lower costs. AI-programmed credit systems are advancing into one that looks into data and distinguishes high and low default-risk applicants.
These decision systems look into a customer’s available data and employ machine learning algorithms to analyze behavioral patterns. This determines whether they would make a good credit customer or not, thus reducing the possibility of bad loans.
Banks have come a long way in digitization, from the advent of ATMs in the 1960s to digital advisors, fraud detection, and ChatBots. Banks are well aware of the impact AI has on its industry. Over 32% of financial institutions use AI through voice recognition and predictive analysis according to a joint survey conducted by the National Business Research Institute and Narrative Science.
Unless they implement AI as an integral part of the industry, banks risk irrelevancy against the heavy competition posed by Fintech players. AI benefits banks by maximizing their potential to offer better services, personalized experiences, and creating room for growth in the industry.
- @AI News: AI to fight security breaches and fraud
- @CustomerThink: How AI-powered Mobile Banking App Enhances Customer Experience
- @AI News: Case for AI: Robotic Process Automation (RPA)
- @EnterpriseEdges: Artificial Intelligence – A Boon To The Banking Industry
- @MediaAlly: Ally Bank Introduces Ally Assist(SM) Customer Voice Interaction