With the digital boom, industries are redefining how businesses operate. The technology-driven world has pushed every business to strive to adopt newer methods to add value to their offerings. Similarly, the banking and financial services sector is undergoing massive changes to become customer-centric.
To this end, Artificial Intelligence has also paved its way into the banking sector. From machine learning to intelligent decision-making systems and more, the advancements in the artificial intelligence platform have changed the scope of businesses. The development and implementation of artificial intelligence in retail banking have improved operations and customer experience outcomes.
The AI revolution has made advanced technologies and substantial data sets easily accessible to businesses.
Financial frauds include everything from credit card fraud to money laundering, insider trading, loan application fraud, and more. Organised financial crimes are an alarming threat to the banking industry. The cost of fraud across industries in the UK is about £190 billion. The cost of fraudulent activities is expected to increase in the coming years.
Artificial intelligence in financial services has seen heavy investments to combat this issue. Since AI is data-driven, it helps provide insights into anomalies to check for any possible risks of crimes. These insights highlight high-risk cases for experts to keep track of. Moreover, it saves time that would otherwise be wasted in tracking piles of fake alerts.
AI derives data from past interactions with customers to determine their behavioral patterns. Based on these insights, the banking industry customises products and services to best suit its customers. Moreover, it enables the financial services industry to personalise the features of the products. Customer engagement is driven mainly by meaningful interactions with the business.
Customers’ expectations of receiving personalised products and services have led to further personalisation to meet this demand. AI-based algorithms have enabled hyper-personalisation generated from customer behavior, transaction history, feedback, and social media interactions. Artificial intelligence platform provides predictive analytics that assists customers in handling their finances in a better manner. Intense competition in this industry has made AI indispensable for enhancing customer experience.
Generally, implementing regulatory compliance is a complicated task in the banking industry. AI has made regulatory compliance easy and safe to implement.
AI-assisted automation of repetitive tasks vastly reduces the scope for error. Moreover, AI has enabled continuous compliance assessment through vulnerability scans and records of transactions.
The traditional process of onboarding clients is a lengthy process that takes a lot of effort from the client. AI significantly makes the process efficient through the KYC (Know Your Customer) technology. Integrating this simple system into the onboarding process can vastly reduce the dropping of potential clients. Meanwhile, it also dramatically speeds up the process, thus improving the customer experience.
The introduction of the chatbot feature, an AI technology, has done wonders for customer support. It interprets clients’ queries and provides them with relevant solutions. The response time to queries has drastically reduced with the introduction of this feature.
Credit applications are seeing an upward curve. It has increased the need to automate the approval process. In the past, credit decisions were taken by humans based on a scoring formula. A customer’s past records were taken into consideration. The influence of human bias would often come into play in these situations while also lengthening the process.
By taking over this process, AI assists in making far more accurate decisions in a short time. Moreover, AI eliminates the risk of bias while accurately assessing lower-cost borrowers. With the help of AI, banking and financial service businesses are making informed decisions. It assists in identifying high-risk individuals and those who are creditworthy.
Automation of work is always a clear benefit for businesses, especially the banking industry. By shifting repetitive and mundane tasks to AI, banking experts and professionals can focus on building stronger relationships with clients.
For instance, a client makes an application for a credit card. The process that follows is assessing, reviewing, and verifying the application after feeding it into the system. The risk score is calculated based on the application review. This lengthy process can get quite monotonous if a human has to do it regularly. This is precisely where AI comes in handy. All one has to do is enter the data. AI then reviews, verifies, and calculates the risk score. An added benefit is the lower scope of human error. AI accelerated the process of customer acquisition and allows experts to handle more strategic tasks.
An automated system of buying and selling shares using complex arithmetical formulae is commonly called Algorithmic Stock Trading.
Historically, humans bought and sold shares manually after analysing market trends. The process has to be quick as stocks are to be purchased at low prices and sold at higher prices. By stepping into this space, AI assists by analysing a mountain of data swiftly. Consequently, one can make more accurate trading decisions based on data.
The banking and financial services industry spends a lot of time processing documents. Reviewing the documents manually can take up a lot of time that would be useful otherwise. AI-driven technologies do the same job in seconds. It can be implemented for strategic purposes such as:
While human interaction has its own benefits, it increases the scope for common errors. On the other hand, AI uses data to arrive at the right solutions and insights. The technology assists clients with a lot of their queries and work. Since customers swiftly receive accurate assistance, there is less requirement for actual human employees for the same tasks. Overall, this brings down the labor cost.
Artificial Intelligence in retail banking not only automates the banks’ processes but also dramatically reduces risks. AI exists to help humans and not completely replace them. Therefore, it is time for the banking and financial services industry to embrace AI to enjoy its benefits for better business performance.