By Rhys V Jones
AI needs no introduction; this technology has made significant inroads into many industries and led to a wide-scale disruption of operations in many more. Just like the launch of the internet created a massive impact on the future, the sudden increase in interest and proliferation of AI is expected to unleash a wave of transformative possibilities. This is especially true in the banking and financial services sector, where AI can prove to be a crucial component in driving transformation. As we skim away from the post-pandemic environment, one thing is certain, the shift in customer preferences towards mobile-first and online is here to stay With the ever-evolving customer expectations and mounting pressure on banks to adapt to change, AI can be a game-changer in building the future of BFSI.
In fact, reports suggest that the market for AI in the banking sector, which was valued at $3.88 billion in 2020 will skyrocket to a staggering $64.03 billion by 2030. Another survey by OpenText revealed that 80% of banks are aware of the potential benefits and are planning to deploy AI solutions. It’s evident that Artificial Intelligence is going to be a game-changer, but the question remains: how far will it take the BFSI sector?
Implementing Artificial Intelligence can have far-reaching benefits in transforming operations and augmenting customer experiences. AI can have a massive impact on core banking processes, day-to-day operations, customer service and boosting efficiency. Let’s take a look at some of the areas AI can influence in BFSI sector to understand the implications of how adopting this technology can revolutionize operations and customer experience:
- Enhanced customer service
Picture this; instead of waiting on hold for minutes at a stretch, your queries are resolved in an instant – that’s what chatbots can do! Intelligent banking AI chatbots can be used to address queries related to balance inquiries, expenses, loan eligibility, insurance plans and much more. For banks and financial institutions, this means delivering exceptional customer interaction by enabling frictionless 24/7 customer interactions while saving high on costs. In 2018, Bank of America launched its virtual financial assistance Erica. Since then Erica’s interactions have exceeded the 1 billion mark – a feat that demonstrates the immense potential of chatbots in BFSI
- Anti-money laundering
In the fight against rising financial crime, Anti-Money Laundering (AML) has become increasingly important. AI has the potential to revolutionize AML by improving the ability to detect and prevent suspicious activities. AI algorithms can analyze data in real-time, identify anomalies and raise red flags, while also continuously learning and helping in identifying previously unknown risks. With AI, financial institutions can improve the accuracy and speed of AML, reduce costs and free up resources for other critical activities. In 2021, JPMorgan Chase implemented an AI system to improve their AML program. As a result, the organization was able to cut down false positives by 95% while improving on the accuracy of their AML efforts.
- Enhancing risk management in real time
Banks and institutions heavily rely on data to estimate credit worthiness of any potential client. While analytics can be used to shed light on credit history, income, and other aspects, AI/ML can assign risk scores and predict which clients are likely to default. These insights can be extratracted for assessing the risk profiles of the applicants further. This can significantly help in cutting down time involved in risk assessment and lead to reduced risk and potential monetary losses.
- Personalizing financial services
Growing scale takes a direct hit on personalized services – and with AI in the picture, it’s now possible for banks and financial institutions to make it possible. AI can be used for a variety of purposes; right from helping develop budget management apps that can aid customers in improving money management and achieving their financial goals to AI-assisted investment planning. In fact, robo-advisors are one of the rapidly emerging trends in the personalized financial service space. AI-based robo-advisors can apply traditional data processing techniques, study the market for investment opportunities and create financial portfolios for trading, investments, and retirement plans for customers.
- Reduce scope for errors
Despite largely being digital, banks and financial institutions still deal with paperwork-heavy, manual and human-based processes that significantly contribute to increased operations cost and risk due to potential for human error. These errors are often the leading causes of a security breach and subsequent loss of revenue for the organization. From simple mistakes in following protocol to errors due that arise due to juggling a high volume of work, advancements in artificial intelligence can reduce the margin for error, and cut down unnecessary costs that arise out of it.
The author is global head, banking services,WNS-Vuram
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