The rapidly growing popularity of Artificial Intelligence concepts among various companies across industries is making devices more intelligent, enabling companies to better understand their customers.
The spread of Artificial Intelligence in the banking sector has gradually gained substantial traction. This pace of adoption is sure to be further accelerated as online banking and mobile app-based banking and real-time transactions become more widely accepted. Here we will explore the top use cases of Artificial Intelligence in the banking sector.
- The Rise of Artificial Intelligence enabled Chatbots in Banking
AI has slowly but surely made advances in the banking sector over the last few years. Digital personal assistants and chatbots have changed the approach to customer services and communication. Chatbots have been developed to offer customers a highly personalized experience. In the banking sector, the use of AI can be harnessed to revolutionize the customer’s access to banking products and services.
Advances in AI are making chatbots increasingly accurate and useful in the banking sector.
Chatbots are AI software programs that converse with users through voice and text. Chatbots are enhanced in operational capabilities with Machine Learning, Deep Learning and Natural Language Processing. With AI integration at the core of the software, chatbots can use contextual awareness to make relevant recommendations and give informed answers to customer queries.
At the core of it is further reduction / elimination of monotonous manual work wherever possible in a work environment, leading to efficiency and cost reduction. According to recent surveys, over three quarters of financial institutions respondents view chatbots as a viable commercial solution now or in the next 1-2 years. Some chatbot vendors promise up to 60% reduction in operational costs in specific back office departments of banks.
- AI Integration in Mobile Apps for Banks
Several banks have begun adopting AI technology. According to a survey by National Business Research Institute, 32% of financial institutions use Artificial Intelligence in voice recognition and predictive analysis. Banks are primarily using Artificial Intelligence technology to enhance and personalize the customer experience.
Millennials heavily rely on mobile banking. This means that AI-powered banking apps can meet user expectations among the youth with contextual, personalized and predictive services.
AI-powered banking apps can track user behavior, offer personalized tips and insights on finance and financial practices.
- Artificial Intelligence and Customer Support
While several automated banking processes are largely a result of AI integration, the main role of AI in banking is to enhance customer service.
Automated AI-powered customer support can gather relevant customer data from the user’s mobile devices, process the data through Machine Learning algorithms and provide necessary information to users or redirect them to the appropriate source of information.
It is also easy for banking apps with AI integration to offer customers services, insights and offers after analyzing the user’s behavior.
Banks can also offer wealth management services to customers by integrating AI technology into their apps. It also becomes easy to assist customers in financial planning using AI strategies. For instance, in case a user expresses interest in buying a house, an AI-powered mobile app can guide them by providing information on a feasible budget and associated costs on the basis of the customer’s current income and expenditure.
- Artificial Intelligence and Personal Finance Management
Personal finance management is currently undergoing rapid changes with PSD2 opening up new avenues for banks in terms of what they can do for customers after gaining access to their financial information.
Artificial Intelligence can impact personal finance management in the area of spend forecasting, to offer customers realistic predictions of how much they will spend in the coming months. This can help them make better savings-oriented decisions.
- Artificial Intelligence and Fraud Detection
AI in the banking sector has great potential in the field of fraud detection. AI’s use in fraud detection is most commonly seen in the identification of fraudulent transactions on Credit or Debit Cards. Here, the customer receives an almost instant message or call from the bank about irregular activity in their account.
Gradual improvements in Artificial Intelligence, Machine Learning and Big Data Analysis will further enhance the accuracy of fraud detection.
Read More: AI Powered Financial Advisors and the Future of Investments
Benefits of Artificial Intelligence in the Banking Sector
There is immense potential for AI in the banking sector. Let’s look at a few benefits of Artificial Intelligence for banks.
- Reduce workload
AI-enabled assistants and chatbots can reduce manual workload for banks and their employees by being available round-the-clock. Chatbots can assist customers in conducting basic banking operations such as opening or closing accounts, fund transfers, opening investments among other services.
- Gather and analyze relevant data
A customized banking app, loaded with Artificial Intelligence capabilities can collect relevant data, analyze the data to improvise a bank’s operations as well as the overall user experience.
Data regarding financial transactions can help banks understand the expenditure trends and patterns of customers. This can greatly help the banks formulate customized investment plans according to the customer’s individual requirements.
- AI enables banks to improve risk management
AI integration in banks systems can allow a more simplified risk management process. AI-powered systems can also analyze the prospective customer’s behavior through a comprehensive, intelligent risk assessment process.
- Identify and prevent probability of fraud
Artificial Intelligence capabilities integrated into the bank’s systems can minimize errors in identifying the possibility of fraud. AI enabled systems can analyze relevant data about prospective borrowers, identify suspicious activity in the customer’s account through behavior analysis.
The Last Word
Artificial Intelligence can essentially provide futuristic improvements to the banking sector. AI enabled mobile apps can ensure instant and highly user relevant transactions. This next generation technology can, undoubtedly help banks deliver sharply customer-oriented operations, while reducing costs significantly.
Explore our enterprise-ready suite of products and solutions for banks and corporates and join the revolution in payments modernization and data management for financial institutions with Evolvus.
Balaji is the co-founder and Chief Executive Officer of Evolvus Solutions Pvt Ltd. He plays a critical role in anchoring strategic priorities for the company to gain leadership position in the payments domain.