How will artificial intelligence change the banking sector?

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Introduction

Artificial intelligence is at the heart of a seismic shift in the financial sector. It has already begun to enable banking organizations to redefine operations, establish innovative products and services, and influence the customer experience.

And the best part: We are just starting to feel the tremors of a far-reaching revolution.

We are entering the age of machines, the banks that are the first to adopt these technologies will have a serious advantage and will find themselves on the competitive edge.

However, if they are late, new fintech firms will leverage these advanced technologies to hire them with their sophisticated algorithms.

So if financial industry players want to maintain a strong competitive edge, they need to embrace AI and carefully integrate it into their business strategy.

In this blog post, we will examine the dynamics of artificial intelligence ecosystems in the banking sector by understanding the colossal impact of artificial intelligence on the banking sector.

We will also see major disruptions in the industry. Finally, we will explore how AI is changing the banking sector and its future financial impact.

1. Financial institutions became the first to adopt artificial intelligence to protect their futures.

Analysts predict that over the next 10-15 years, artificial intelligence applications will create $ 1 trillion in financial sector funds in savings. These savings will be achieved through a mix of office efficiencies that encompasses everything from improved data processing to changes in staffing levels.

A trillion dollars is a huge number; However, it does not help us understand the impact these applications will have on midsize financial institutions. But, to translate it more easily consider these figures for your bank:

  • 34% increase in revenue
  • 22% reduction in operating costs
  • 30% higher sales conversion rate

Now, imagine the impact of these results on your bottom line!

Artificial intelligence is poised to drive unprecedented gains for all who are ready to embrace it in the financial sector. Over 70% of large banks are already planning to implement artificial intelligence solutions for the front or back office.

Unfortunately, midsize banks are struggling as only 2% have implemented the technology and in the near future only 13% intend to invest in AI.

For sure, it’s a challenge, however midsize banks need to take some foresight and their credit unions should recognize it as an opportunity if they want to thrive in the future. More importantly, if your competitors ignore it, it means it’s time to start the implementation.

2. AI wants to fuel revenue growth

By 2030, applications based on artificial intelligence will increase revenues by 34%.

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AI-powered applications can help increase revenue by harnessing the power of machine learning. Deep learning applications can identify sales motivations and triggers by scanning millions of records and examining consumer behavior.

Hence, computers can be used to automatically deliver targeted messages to customers by applying that knowledge.

3. Higher conversions with personalized offers

The foundation of a good marketing practice is to deliver the right message (offer) to the right people at the right time.

New age bankers draw on experience to achieve this hat trick and guide clients to their branches. However, with AI, they can take a deeper dive by automatically offering personalized offers that make customers more likely to take action.

The best part, no staff intervention is required. For example, organizations that implement virtual assistants and chatbot for the customer service report 30% higher conversion rates from sale.

4. Automated and cross-selling

Artificial intelligence In the banking sector, it can learn trends in consumer behavior and, based on this, self-suggest and cross-sell to interested customers. Technology can suggest the appropriate sale to bank staff during their face-to-face interactions with customers.

Let’s take an example, most current web interfaces have post banner ads and pop-ups to automate upsells and cross-sells. However, we’re not sure how often they work or if they’re as efficient as they could be.

Instead, what if you have a chatbot to greet customers with their name and voice? What if that chatbot or assistant initiates conversations based on a user’s transaction history? For example: “Hi Ann, I see you sent nine international wire transfers last week. Did you know of other electronic payment options available at a lower cost?”

Unsurprisingly, customers are more responsive to that type of prompt than banner ads.

5. Robo-consultants

Are we talking about getting financial advice from a car?

Yes, and believe me, it’s not that far-fetched. Additionally, it can yield much greater dividends than personalized recommendations as it is prone to human error.

In reality, customers can process little artificial intelligence and data that is funneled through numerous layers of neural network. Plus, its solid market advice helps keep customers coming back by creating wealth.

6. High Risk Customer Notices

Artificial intelligence applications it can help banks recognize the warning signs that a customer is about to abandon ship.

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Well, AI can do it simply by constantly monitoring and monitoring the low frequency of access to the platform and large withdrawals, for example. Computers can therefore automatically alert bank staff, giving them the opportunity to intervene.

Such automated processes help grow revenue by freeing up bank staff and saving time to focus on deeper and more valuable customer engagements. In turn, this can help achieve greater profitability by improving a better customer experience and ultimately increase sales.

7. Artificial intelligence wants to offer significant savings

Increasing revenues is only part of the equation as implementing AI can help banks save tons of money. This is because there is no better way to reduce costs than with artificial intelligence applications without compromising the quality of service.

In fact, AI in the banking system can offer a better customer experience as it allows staff to focus on customer retention.

8. Improved customer experience

AI-powered chatbots and virtual assistants in the banking system are a breakthrough. They can acquire new customers, answer customer questions, and help manage customer accounts.

This means banks will no longer need staff to move money between accounts, or help customers reset passwords or find month-old copies of bank statements.

Additionally, image recognition can eliminate the need for passwords through advanced face recognition and biometric data. This will improve the customer experience, save time, and reduce costly security breaches.

Banks can also leverage Natural Language Processing (NLP) for direct customer interactions via virtual assistants such as Siri and Alexa. These bots can be deployed on different platforms, such as Facebook Messenger, to reach customers in their comfortable environment.

Indeed, implementing artificial intelligence for customer service, organizations report 33% savings over a live agent call, 70% fewer calls and email inquiries, and huge savings in staff time.

9. Increased operational efficiency

Experts say that banks implementing the AI ​​a 22% reduction in operating costs compared to those savings by saving staff hours and eliminating errors.

10. Accurate Processing

Today, 70% of banks prioritize integrated credit, and for good reason, for example, according to some NACHA estimates, more than 60% of ACH payments come separately from remittance information.

Stranded credits means that staff members have to trace email remittances and manually enter the data. This, in turn, delays publication, stretches the DSO and impacts cash flow.

By leveraging smart automation, banks can analyze large, unstructured data without human intervention and re-associate payments. Indeed, artificial intelligence can increase processing rates by up to 95%.

11. Workflow automation, contract reviews and reporting

Bank staff analyze and organize unstructured data that is tedious, expensive, and error-prone work. The banking industry can use artificial intelligence algorithms and robotic processes for fast automated workflows and eliminate the need for human involvement.

Over time, AI becomes even more efficient and leads to billions of dollars in savings across the financial sector.

12. Improved risk management and compliance

We all know that fraud costs banks millions if not billions. And, even if a bank is lucky enough to recover funds lost due to the fraudulent transaction, it must relegate staff to fraud management.

The application of artificial intelligence in the banking system can help prevent fraud. Artificial intelligence algorithms can scan millions of credit card transactions for potentially fraudulent transactions.

Additionally, AI-powered applications can help banks automate anti-money laundering (AML) and Know Your Customer (KYC) compliance. These tools can pull data from a different source to quickly report suspicious activity while onboarding or review millions of transactions.

Finally, AI supports reliable credit decision making by analyzing millions of data points against traditional and non-traditional criteria to arrive at instant credit decisions. For example, the borrower’s education and work history.

This will benefit financial institutions in three ways: minimize risk, invest confidently in high-value clients, and lend funds quickly to avoid losing business to competitors. Ultimately, this reduces the need for human intervention.

Biography of the author:

Shreeya Chourasia is an experienced B2B marketing / technology content writer, who is diligently committed to growing your online presence. His writing doesn’t just direct the audience to take action, rather it explains how to act to get promising results.

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