- Chatbots are a great AI tool and have been used over the years to improve and ensure exceptional customer service.
- AI technologies are now a critical part of personalization services in the banking industry.
- Risk Management is applying AI technologies to provide better security and to detect account anomalies and reduce fraudulent activity.
The pace of digital transformation in banking has accelerated during the past year. Banks process a sizeable number of digital transactions and maintain a vast collection of customer data. Capable of analyzing massive data volumes, artificial intelligence has the power to revolutionize how banks use all this information. The following are three areas where AI trends are significantly impacting the financial banking industry in 2021.
Many banks have used AI digital chatbot agents in customer service for years, but these are primarily for simple conversations about basic banking transactions and problem resolution. This AI trend is moving toward more sophisticated engagements that address complex situations. Chatbots are also increasingly being used with mobile apps. As chatbot technology becomes more adept at imitating real human-to-human interaction, the customer gains a satisfying personalized experience, and banks are rewarded with lower costs and higher productivity.
AI will have a critical impact on banks providing customers with personalized service. Anticipating customer needs by harnessing the immense power of AI-driven data analytics, banks can tailor and recommend optimal financial products that are relevant and situation-appropriate. This customized approach ensures all clients get exactly what they need in a fast service experience.
Banks use AI to analyze customer account information and spending behaviors. This process identifies the most advantageous traditional bank product solutions and other profitable offerings in insurance, bill payment, retirement planning, mortgage, and lending. With this personalized approach, banks learn about customer satisfaction and frustrations and better understand undeveloped needs.
3. Risk Management
Another area of the banking industry where AI application is having a significant impact is risk management. AI tools detect patterns and anomalies, providing the ability to predict and reduce risk in multiple banking areas:
- Credit: Banks can use AI to identify individuals or businesses most likely to default on loan obligations. AI can also evaluate creditworthiness without relying on third-party ratings. This enables those with no borrowing history to get established.
- Cybersecurity: Banks have responsibility for customer money and personal information. As digital transactions grow, adequate controls are vital to ensure the security of operations. AI’s robust capabilities monitor IT systems, detect irregularities or unusual behavior and proactively address potential security compromises and cyber threats.
- Fraud: Fraud is costly for banks, so preemptive detection is essential. The pattern recognition capabilities of AI technology improve the identification of suspicious transactions and limit financial frauds like identity theft and money laundering. Even more important than reducing costs, AI fraud detection protects a bank’s reputation by sustaining public confidence and trust.
- Compliance: The compliance process for the heavily regulated banking industry has always been relatively manual. AI implementation allows banks to automate and streamline compliance activities. Leveraging AI, banks easily ensure they comply with laws, regulations, and guidelines, adjust to frequent modifications and identify non-compliance situations.
As the digital transformation in banking races forward, adopting AI in these three areas is imperative for staying flexible, reliable, and customer-focused.