The financial industry has long been plagued with limited digitalization and modernization. Though all banks use quality software systems today, many have yet to embrace the latest round of innovation – artificial intelligence.
Artificial intelligence is generally defined as "intelligence displayed by machines." For our purpose, though, we'll focus on how bank employees can leverage specific machine intelligence, as opposed to general intelligence to achieve a variety of benefits.
What Can AI Do for Your Financial Institution?
AI offers numerous benefits that directly impact customer experience, profit margins, and compliance requirements. Today, financial institutions that embrace this cutting-edge technology will find themselves empowered to achieve far more. It's now possible for machines to interact and learn as they go, developing a better understanding of human need. In addition, they can process human language far more effectively than ever. Today's AI systems are able to make fast decisions with pinpoint accuracy, outstretching the limitations of people.
Much of this comes from new technology, but it also stems on better access to data. Everywhere you look in the financial industry there is vast amounts of incredible data to be had and modified. AI is able to gather this structured and unstructured data to comprehensively use it to achieve a better outcome in dozens of applications. This data comes from many sources – cloud computing, machine learning algorithms, and internet of things connectivity.
All of this creates new opportunities in the banking industry:
- It can help your financial institution to manage back-office operations in a more efficient manner, reducing costs and improving accuracy.
- It aids in providing a better experience for the customer who expects fast solutions to their problems.
- It aids in product delivery, allowing your organization to provide your customers with faster decisions and better overall control over the money.
- It also can help with risk management, allowing for decisions to be made within specific parameters – even when those parameters are ever changing.
- It even extends into marketing, providing very specific messages to your customers and clients as they need them to make buying decisions.
There's no doubt there are many applications of AI, but why should your organization invest in it now? And, is now even the right time to do so?
Understanding the Risks
While countless benefits exist to adopting artificial intelligence within the banking industry exist, many companies sit on the edge, worried about what the risks are. Because AI is still very much a new technology in its current form, many people remain unsure of what the "outcome" or complications might be.
For example, some companies have failed to move forward out of a fear of failure. Yes, there is a level of failure if not properly implemented or limitedly developed. And, others worry about regulatory compliance. Again, this could occur if an inferior product or method is used. Yet, there are technologies that also work to eliminate both of these risks and provide far reduced risk compared to human-led interactions.
Another key reason businesses have yet to adopt AI at a rapid pace is simply a lack of information. Many financial institutions do not have an innovation leader within the business make-up. Even in some of the most well-known financial institutions, there remain very few people who are "in-the-know" on this very cutting-edge topic. Yet, that sense of limited knowledge can backfire as AI continues to progress.
Outlining the Clear Benefits of AI
Keep in mind that AI is customizable and moldable to meet just about any specific goals of the business. That is, solutions are developed based on the financial institution's unique needs. This is a software program with clearly defined limits on what it can do – organizations can use it in many methods to achieve many areas of growth. Take a look at a few key ways AI is already benefiting many financial institutions and what this means for your business.
AI has long been an important component of fraud detection. It can work to monitor changes in accounts, noting patterns that are not normal or that could be indicative of theft. Imagine being able to use a tool that automatically pulls in data from millions of points to determine if fraud is occurring. Imagine the cost savings this presents to financial institutions.
Recommended Services and Products
Now, with thousands of data points streaming into AI, it is possible for the tool to provide recommendations to the client. For example, a customer's spending is tracked. The bank can notice key areas of interest, such as payments to multiple credit card companies. As a result, it can present the customer with an opportunity for a personal loan to pay down debt. This is what the customer needs when the customer is most likely to use it. Recommendations on how to save more or where to save on current expenses not only provides new opportunities for the bank to offer a product but also builds on the personalization and brand awareness banks need to have.
Reducing Labor Costs
How much time is spent in the back office? How much more important is it for bank professionals to be on the floor providing customers with interactions and support? AI can handle many of the back office tasks that humans tend to do right now. Noting the importance of regulation here, keep in mind that AI is far less likely to make a mistake than it is for a human to make that mistake.
Perhaps one of the most intriguing components of AI is its ability to provide information and insight. This comes in multiple forms. It provides the bank with information about products and services, profit margins, and costs. Yet, it goes further. Imagine the customer, who is thinking about spending on a new home, asking their AI-enabled application if they should buy a home now. The tool accesses thousands of points of data and provides insight into whether they have the money to make a monthly mortgage payment.
Hands-off from the bank, it creates an incredible sense of support and guidance that today's consumer wants and needs. Key data like this can reduce risks while improving results. It's just a hint of what's to come in the world of artificial intelligence.