From the use of pneumatic capsule transportation in 1836 to the launch of Bitcoin in 2009, the banking industry has always closely aligned itself with the latest technology. Little wonder then that artificial intelligence (AI) is being increasingly rolled out to help banks improve their operations, save time and money, and better serve customers.
According to a 2022 survey by AI computing business, Nvidia, 91% of financial services companies are driving critical business outcomes with investments in AI. 38% of respondents believe that AI investments had already created a competitive advantage, while 28% believed it had already created improved customer experiences.
The technology clearly has almost limitless potential and fresh ideas will continue to emerge from ongoing research and analysis. Let’s look at five key areas where AI can benefit the banking industry.
1. Improved Customer Service
Most customers will now be familiar with some form of AI-powered chatbots, either running out of hours services, or acting as a first step of security and identification.
These systems grow increasingly sophisticated, according to a report by verloop.io, Google Trends interest in voice AI has increased almost three-fold in a five-year period. Providers are also working to increase the ability of chatbots to provide personalised feedback, allowing businesses to save time and money on customer service and improve overall satisfaction.
2. Enhanced Fraud Detection
With 1.4 million recorded cases of banking fraud losses in 2022, according to UK Finance.org, fraud detection is an ongoing concern for all finance firms. AI can provide comprehensive systems to help tackle fraud, with a huge capacity to scan data and uncover patterns, detecting fraud quicker and more accurately than humans.
3. Streamlining The Underwriting Process
While underwriting generally follows a set process, according to Forbes, many financial institutions make underwriting decisions on as little as 10% of the data available to them. Through the autonomous collection and analysis of large amounts of data, AI can help banks streamline the underwriting process, making it cheaper and simpler to access a greater amount of data to inform decisions.
4. Greater Operational Efficiency
By improving operational efficiencies, businesses in the banking sector can improve their compliance risk, accuracy and the speed of their processes.
In a 2022 report compiled by market research firm, Forrester, on ‘Top Emerging Technologies in Banking’, 37% of survey respondents already using AI were seeing the benefits in improved operational efficiency. A further 89% of respondents confirmed they are either in the planning, implementation or operational phases of using such technology.
5. Personalised Services
Customers increasingly require a tailored product or service that matches their individual needs. In fact, the latest Zendesk CX Trends Report shows that 72% of banking customers rate personalisation as ‘highly important’ for financial services. The same report shows that 77% of business leaders recognised that better personalisation leads to increased customer retention and lower acquisition costs.
AI can be hugely beneficial in this area – being deployed to analyse customer data, identify customer needs and preferences. This can provide valuable information for banks to act on, improving customer satisfaction and loyalty while increasing retention and driving revenue.
Whether it’s improving customer service, enhancing fraud detection, or increasing operational efficiency, AI technology is providing viable solutions to the challenges the banking sector faces.
A great place to look for the future of AI is the start-up world, where innovative entrepreneurs are continuing to develop unique and viable products that push the capabilities of the technology. As AI continues to evolve, those that keep themselves at the forefront of developments will be better positioned to compete in an increasingly competitive marketplace.
