By Vibhore Goyal
The banking system in India has diversely changed over years influencing banks with their processes, technologies, customer interface and so on. Customers have evolved, which is a transformation that is equally important to the banking and financial industry and requires more attention. And in this context, technologies like Artificial Intelligence (AI) play a crucial part.
In the past two years, customer expectations have risen sharply. They have grown accustomed to receiving the same smooth, effortless user experience from their preferred social media sites and banking apps. This in term is a reasonable assumption during this time when the distinction between the two is becoming increasingly hazy as social media is merged into not only payments and e-commerce but also the buying of mutual funds and insurance.
Secondly, customers have become far more aware of their rights. It was once when a customer of a well known bank asked for a shutdown of their credit card.The bank in this case took five weeks to close the card down, more than 30 days i.e, mandated by the Reserve Bank of India. During the extra days, the card generated very little revenue, but the bank was hit with a much bigger fine. The client complained to the regulatory body, which led to the fine.
Customers are more ready to pay for high-quality services and an enjoyable experience now that they are more aware of their rights. Freebies are no longer the only focus.
If we combine these three trends, a picture of enormous promise — that premium goods can be developed and encourage innovation — emerges. There isn’t any reason for banks to be restricted to luring customers with “lifetime free” cards or cards that are nearly free.
Consider the situation of one such medium-sized firm who is about to collaborate with NEO BANK. The bank provided the top 25 executives with a really high-end card that would take care of all of their normal bill-paying concerns, including mobile, broadband, OTT, and anything else. The card would also streamline the process of completing expense and travel reports. However, each ID would cost the business Rs. 1 lakh annually. The business quickly and without hesitation agreed.
Neo banking, which is all about banking developed to a high level of accuracy and efficiency by using the latest technologies, particularly AI, is receiving a huge benefit as a result of these kinds of things. At the moment, AI’s position in banking is restricted to digitization, product analysis, and upselling. It is not being used in order to have a comprehensive effect.
For example, Sheela (name changed) living in Mumbai pays a hefty house rent, does not know how much home loan she can get for the same value as EMI. She could actually pay a slightly lower EMI as compared to HRA plus save on taxes equal to the interest of the house loan, according to an analysis run by a small sample group. This understanding could turn someone who is paying a monthly rent into a customer for a Home Loan for a bank while doing practically nothing to generate an asset for themselves. We often look to minimize rent, without knowing what is the right rent range that we should be searching for based on HRA given by our employer. While these might be complicated decisions for a human being, our AI engine can start to generate these personalized recommendations in three months of onboarding.
Once you file for a home loan with a bank, the information is collected in one location and distributed to other departments. Because of this, calls giving the applicant a credit card and a savings account follow a home loan application. Digital technology is now only used privately to share customer data. With the right application of AI, all expenses can be classified, and tips into how a customer should handle their expenses can be garnered. To do that, the appropriate environment needs to be created.
For instance, few banks look at a family of five as one unit. They are usually viewed as five different customers. It is only in the case of add-on cards that a connection is established. If the husband and wife have two unconnected cards, banks view them as two distinct customers. AI can help build the right ecosystem in which a family can be viewed as one unit and its needs and expenses and aspirations can be addressed holistically.
But that is not going to be easy. Most banks adopt a conservative approach, largely short-term in nature. Secondly, there is a fear of customer data, which is ironic for an industry that thrives on use of customer data. This fear comes out of a lack of knowledge about how this data travels and because of the instances of misuse.
AI can handle customer data so efficiently that it will eliminate fraud and establish trust in the system. Take the recent headlines about moonlighting of employees being discovered because of two separate provident fund accounts. If AI is at play, there will be no such occurrences. It can improve compliance to a very high level.
This is accomplished by establishing communication channels between all parties engaged in a transaction and ensuring secure, seamless data flow. This will result in the development of the ideal ecosystem, where AI will eradicate fraud and fear to generate profit for all parties involved, including clients and service providers.
The author is founder, OneBanc