The Heightening Impact of AI on Financial Services

Banking CIO Outlook | Tuesday, August 13, 2019

Artificial intelligence in banking is more than just about chatbots. It is high time that banks adopt AI to provide enhanced customer experiences.  

FREMONT, CA: Artificial Intelligence (AI) is a fast-emerging technology for businesses across the world, providing intuitive customization features. The technology allows more companies and newer enterprises to adopt AI for various applications. The banking sector is becoming one of the early adopters of AI, and it is exploring and implementing technology in multiple ways. The banking industry is originally a world of networks and computers. AI aims to transform further the way banking is done and the relations between banks and their consumers' experience. The primary applications of AI include bringing intelligent chatbots for customer service, personalizing services for people, and even placing an AI robot for self-service at banks. Beyond these quintessential applications, banks can implement the technology for drawing in more efficiency to their back-office and also alleviate fraud and security risks.

A report recently revealed that worldwide spending on AI applications touched $5.1 billion, up from $4 billion in 2015. AI in the banking sector is one of the most eloquent applications of AI through the use of conversational assistants, or chatbots, to engage consumers 24/7. Customers are increasingly satisfied with chatbots handling multiple issues, even individual conversations regarding bank services, bank transactions, and other tasks that don't inevitably require human intervention. Banks have also been getting good results in using chatbots to make their clients aware of additional services and offerings. Banks can segment clients individually, rather than the conventional generalized customer buckets. By using AI-based pattern behavioral and matching analysis, banks can make the correct offer to a suitable customer and respond to immediate finance-related consumer service needs.

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Digital personal assistants and chatbots have transformed customer services and business communication. From assisting people in executing daily tasks to giving them a personalized experience, chatbots and virtual assistants have many applications. Mobile app development services can integrate AI technology for enhancing services in banking. Most of the banks have started adopting AI and related technologies globally. Banks are using AI for improving the consumer experience by giving it a personalized touch. Banking regulatory compliance is critical and a formidable liability if not followed. As a result, banks are focusing on smart, AI-based virtual assistants to carry out transactions, study consumer behaviors, and audit and log data to various compliance and regulatory systems.

Banks are practicing AI-based systems to help make more reliable, informed, and profitable loan and credit decisions. Using data that's accessible, AI-based loan decision systems and ML algorithms can look at patterns and behaviors. This is to determine if a customer with restricted credit history might make a good credit customer or find consumers whose patterns might enhance the likelihood of default. The difficulty with using AI-based systems for credit decisions is it can suffer from bias-related concerns similar to their human counterparts, which are due to how loan decision-making AI models are instructed. Banks looking to use ML as a component of real-world, in-production systems need to make specific to factor preference and ethics into their AI training methods to avoid potential obstacles. This is the case, especially when using AI algorithms, such as Deep Learning (DL) approaches, that are inherently unexplainable.

Bank industry is mostly digital in operation, but it is still riddled with human-based methods that sometimes are paperwork-heavy. Banks face tremendous operational cost and risk issues due to the potential for human error. AI in banking is being implemented to these processes to eradicate much of the time-intensive and error-prone work entailed in entering customer data from forms, contracts, and other sources. Augmented handwriting identification and new technologies, integrated with intelligent process automation tools, are appropriated in back-office operations to manage a broad range of banking workflows. AI has enormous potential for the banking sector. It brings automation and simplifies the process.

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