With the commoditization of banking services, the biggest differentiator for banks today is customer experience. Customers are far more likely to choose a bank based on factors such as the ease of navigation or quality of issue resolution; rather than on the actual offerings.
This creates a challenge for the banking industry that is already in a state of flux and is grappling with the rise of more tech-savvy & “born in the cloud” banks. Banks are also struggling to reduce costs, maintain margins, increase revenue streams, increase the utilization of current assets and ensure greater security.
On their part, customers have become more demanding than ever before. They look for instant gratification, especially the millennials – they expect a high quality of interaction and seek super quick resolution of any requests. As banking becomes more digital, delivering the best experience online becomes a challenge.
The answer to addressing these issues lies in Artificial Intelligence (AI). The banking industry has already acknowledged the importance of AI in banking. As per the Accenture Banking Technology Vision 2017 report, four in five bankers believe AI will revolutionize banking, both in terms of customer interaction and information gathering.
With advances in automation technology, AI adoption is helping digital banks address several areas:
Faster and More Efficient Customer Service
AI can analyze data and deliver information at speeds that are impossible to match for a human customer service agent. Therefore, AI can eliminate wait times and deliver more precise solutions. Also, AI has a role to play in making customer service agents far more efficient by a) empowering them with information and b) freeing up their time by handling simple requests independently.
Over the years, the nature of a bank’s interactions with customers has been evolving as online and Voice interactions have become the norm and this trend is expected to continue.
As counterintuitive as it sounds, using automated technologies for customer interactions can actually help personalize the interaction greatly, instead of a one-size-fits-all approach. Besides, AI can help simplify user interfaces and even personalize them based on past experiences.
AI, through chatbots, has the ability to deliver far more personalized interactions based on data. It can offer personalized advice on complex topics such as loans and investments.
With capabilities such as predictive analytics and machine learning, AI can offer insights on designing processes, improving decision-making and increasing profitability. Besides, it also allows customer service agents to use their time better.
Targeted Marketing and New Revenue Streams
Today, mass emailers and promotions simply don’t work as customers have become more discerning. Through AI and predictive analytics, banks can design extremely targeted marketing campaigns and promotions that are tailor-made for each customer based on their banking history as well as external data. With its ability to identify patterns that are not recognizable by humans, AI can help maximize each marketing dollar.
Safety and Security
AI can provide a great way to curb money laundering and fraud by recognizing patterns and spotting irregularities. By studying complex relationships between customer behavior and suspicious patterns, AI can use Machine Learning, Predictive Analytics and statistics to pinpoint anomalies and predict fraud even before it happens.
There is understandably a certain apprehension about using AI in banking, especially given the risks associated with it. A lot of this apprehension is a product of perception, rather than reality. In many ways, it is similar to the initial hesitation around using cloud computing – where on-premise data was perceived as being safer than data that resides on the cloud. Just like we now accept that cloud-data is as safe as data that is inside the firewall (provided safety compliance is maintained), more awareness around AI will help quell any doubts over safety.
All things considered, AI is certainly here to stay as we enter the next era of digital banking. Of course, implementing sophisticated technology (like AI) alone will not help. Enterprises need to look at a top down cultural shift along with technology to improve the process.