With new technologies like cloud computing, machine learning algorithms, and more, there is more space now for AI to play a much bigger role, especially in the banking industry.
All the new advancements in tech and also new regulations, competitions and consumer expectation means that financial corporations will have to keep evolving to make sure they are a few steps ahead all the time. It was reported that since 2000, more than half of the financial companies that were listed on the Fortune 500 have failed to brave through the storm and have since dropped out of the business game.
While AI can intensify the competition between companies in the banking sector, it can also open up a lot of new possibilities for the companies. Not only does it help improve efficiency by eliminating repeating and laborious tasks for the employees but it also helps them make a more effective and efficient decision in regards to the consumers, investments and more.
AI in Banking
We will see AI play a much bigger role in the development of financial services in the near future as algorithms are used by machines to modernize how a bank works, what they sell and how they communicate with their clients. By using both AI and people, financial corporations will be able to improve their efficiency and make banking a much more pleasant experience for both their employees and consumers.
Improvement of processes
AI is already being used to lighten the workload of the employees as processes like scanning of documents can now be carried out automatically. One great example is where image recognition is combined with machine learning to scan masses of documents and further action based on valid regulations can be taken. The AI will then sort the cases and refer them to the right person or machine to be analyzed.
In countries like Australia and New Zealand, more than 40 processes are already completely automized right now including repayment of mortgage credits and creation of a half-yearly audit, containing data collected from various systems. Not only does this improve the experiences of their consumer but it also makes the working experience far more satisfactory for the employees. Other companies like Barclays have also automated a number of processes like the analysis of receivables and verification of unfair practices. With this new implementation, the British holding company is able to reduce reserves intended for securing bad credits by about USD 225 million a year.
In the past, each bank client will have to analyze and profiled but with AI, they can also identify clients who will most likely leave the bank in the near future. Using chatbots and similar other tools, the AI is able to identify which client will have a higher chance of investing in their funds in the future. Banks are also able to identify the credit risk for each application making the process much easier for the creditors to come to a decision.
Virtual Client Service
AI is also being used by many companies as part of their virtual client service. JPMorgan uses bots to respond to internal IT inquiries so that menial tasks like resetting an employee’s passwords can be handled easily. The bots can handle up to 1.7 million requests of access to IT resources in a year alone which will generally take about 40 full-time employees to finish if AI was not implemented. Fukoku Mutual Life Insurance, a Japanese banking and insurance company uses the Watson Explorer system by IBM to take over the workload of about 34 employees.
Fraud Detection & Risk Management
AI can also be used to sniff out potential frauds even before the fraud happens. By imitating the thinking process of an analyst, the AI will look at each transaction and fire a warning about potential frauds along with performing some accurate percentage identification of the likelihood of occurrence of embezzlement which would not only benefit the bank but also their clients.