Those who follow banking trends know how much financial institutions have evolved in just the last few decades.
There are now all sorts of digital options for customers along with more tools available for bank employees to improve their accuracy, security, and overall efficiency.
What’s particularly exciting is what’s coming next: more opportunities for Artificial Intelligence in banking. By exploring the benefits of artificial intelligence, or AI, banks have new avenues to offer even stronger service to customers.
Value of AI for banking
Options to utilize AI in the banking industry can include creating and implementing strategies to improve the overall efficiency of a company’s processes and procedures.
These can include how the bank gathers data, as well as automating certain routine tasks that previously have been performed by humans. For instance, digital processes can now do everything from improving security to evaluating a customer’s overall creditworthiness.
This usage of AI in banking doesn’t mean that bank employees have become obsolete: they still can and should be placed in key positions, everything from providing more responsive service to customers, to making sure AI processes are properly implemented and continue to run.
On the customer care side, for instance, an AI “chatbot” may be able to help with basic troubleshooting but if a customer still has a complex question or a difficult situation, a human is often best equipped to tackle this topic.
AI and banking can also mean new career opportunities for workers with technical skills such as programming and data analysis who may never have considered working in the banking industry.
Because more banks are embracing AI solutions, there’s plenty of potential for ways they can be implemented.
So, it’s not much of a stretch to say that AI can help banks be competitive. Gartner predicts that automated software spending will continue to increase at the same time cost savings grow in terms of increased productivity – a definite reason for banks to explore automation.
Banks will collectively spend as much as $623 billion on tech products and services, including fraud detection, risk factor modeling and trading.
How does AI help in banking?
Banks are already looking into a variety of methods to use AI across their business.
Security. An AI-powered system can scan customer activity patterns and send alerts if something unusual is detected, such as a transaction from a different country or a significantly sized deposit or withdrawal. This is based on learning patterns of customers in terms of spending habits in their community or with their family. Automated fraud detection can take place long before a human notices, which can reduce abuse and financial loss. For instance, an AI fraud detection service can temporarily freeze a debit card and alert the customer if possible unauthorized activity is detected. It can also run similar checks of the bank’s systems to detect possible theft or at least unusual patterns.
Routine tasks. Robotic Process Automation allows software robots to take care of basic routine tasks and processes. Once rules are created, the ‘bots’ can take care of basic entry or move data between systems and spreadsheets. This can save time normally spent on dull paperwork, and can allow staff to focus on more mission-critical tasks, and improve overall productivity. The ‘bots’ can also work around the clock without needing lunch breaks or going home at the end of the workday. Errors will be reduced to almost zero.
Customer assistance. On the front end, an Artificial Intelligence system can be used to answer customer questions or concerns, based on a ‘bot’ making sense of user queries to find the correct response. A bank can create a system where customers can type their questions and the ‘bot’ can answer them in a conversational style based on familiarity with certain keywords or common issues. Customers can often have their basic question answered without waiting on hold or navigating a messy voicemail system. Escalation to a human is possible in cases that require more care.
Decision-making. By being able to access a customer’s financial data, a bank’s AI program may be able to give an estimate of their overall creditworthiness or how much debt they likely can handle if they’re applying for a loan. A human can still make a final decision, but the basic data and recommendation from an AI system can be a huge aid in the decision whether to approve or deny an application.
Managing risk. Analyzing customer patterns can also help predict possible problems in the future at the individual and institutional level. This goes beyond approving or denying a loan and extending credit but making recommendations about a customer’s overall financial status. For instance, if a certain number of overdrafts or late payments occur in a specific time period it could trigger an alert to contact them about financial assistance or counseling options. It also can evaluate possible risks to the bank.
An AI-enabled future
Once you start thinking about the options available for the use of AI in banking, it’s easy to see the opportunities for many creative solutions, especially for an institution that prides itself on being customer focused. By “delegating” some of the routine background tasks to AI, it can create more opportunities for the staff to focus on quality, efficiency and service.
Customers are also beginning to expect some of these services as they become more popular, so offering these can help build loyalty.
There are certainly challenges, such as making sure the AI tools are accurate and used correctly with the correct data. And, as always in banking, security and compliance are paramount. But the potential to automate some processes and the opportunities ahead can be exciting.