The financial services industry across the globe has been enthusiastic about the adoption of Artificial Intelligence (AI), led by the availability of data and an increased investment appetite. AI has given banks a new tool to manage tasks that are usually time-consuming, labour intensive and prone to human errors. In short, from customer service and operational efficiency to fraud detection and risk monitoring, banks have gained better control with AI.
Indian banks too have explored the use of AI, although in limited capacity, with tools like chatbots. However, the Indian banking industry has some catching up to do to keep up with the latest advancements in AI used by new-age fintechs and challenger banks.
In the current climate, customers expect a faster and more personalised banking experience. The ever-growing fintech adoption proves that customers are ready for new technology. In this highly competitive world of financial services, it becomes even more essential for banks to proactively embrace tech innovations.
The use of AI for analytics can help banks leverage contextual, real-time data from digital interactions to improve customer experience and help stay relevant in the long run. The three key areas where banks can leverage the power of AI and grow are:
1. Optimise processes with intelligent automation
Robotic process automation can help banks reduce the risk of manual errors by digitising manual entry of client information from different sources. Mechanising procedures can thus enable bank executives to focus more on customer relationships and client care. Intelligent automation can further optimise back/middle office operations, helping banks manage risk and protect themselves from bad actors. With a predictive approach to risk management, banks can quickly adapt in times of crisis, while continuing to function efficiently.
2. Reduce overheads
Risk monitoring is not just a challenge but it is also expensive. Deploying context-sensitive AI solutions can help banks in real-time transaction monitoring, that is both adaptive and cost-effective. Banks can thus leverage multiple data points to detect patterns, predict events and anticipate risks. Taking a predictive approach to risk management rather than reactive will help banks to ensure stability and adaptability in the event of an adversity. Banks can also address queries more efficiently using AI-powered intelligent bots and serve customers better. Thus, increasing customer engagement and trust while reducing costs.
3. Anticipate and mitigate risks proactively
As per an annual report published by the RBI in 2019, losses resulting from banking frauds shot up by 73.8%. Another area of concern as mentioned in the report is that the average time taken to detect fraud was as high as 22 months! Due to their legacy systems, banks lack the agility and robustness to identify and tackle frauds at the root. Context-sensitive AI solutions can help banks anticipate risks by analysing large data sets to detect patterns and predict events. Over time, banks can proactively identify issues and mitigate risks. Therefore, being prepared to fight the growing threat of cyber attacks.
4. Personalise & create meaningful customer experiences
Banks have access to huge amounts of customer data - both transactional and non-transactional that, if leveraged, can translate into guaranteed source of revenue. While targeting users with customised offers is not a novel concept for banks, with AI they now have new tools to offer personalisation at scale. AI helps turn insights from data analytics into actionable offerings such as help customers manage their finances, invest better and make smarter purchase decisions. Thus, offering a holistic and meaningful banking experience to their customers.
To survive the impact created by the pandemic, banks will need to leverage data and technology to better serve their customers. Data and advanced analytics combined with AI-powered tools can help banks drive day-to-day tasks with operational intelligence. From forecasting market outcomes to mitigating risks and even managing process efficiency - AI can augment traditional banking functions.
The future of banks will depend on who delivers the most relevant and personalised experiences at speed. While new age fintechs and challenger banks have done that to an extent and won customers, banks still have the advantage of being the domain expert. Complementing this expertise with artificial intelligence gives banks an unfair advantage in delivering meaningful customer experiences -- which is crucial for their growth in a competitive world.