That could mean savings to the tune of $1 trillion ahead.
The path to this outlook is not straightforward, however. Just like the rest of global employers, banks are staring at a short supply of professionals skilled in everything AI.
AI gave birth to a new wave of applications and services in the financial market.
Since AI can handle unstructured information such as images, video, audio, location, and time series data perfectly well, there are already AI-based solutions able to detect fraud, assess creditworthiness and risks, identify a person based on his/her digital footprints, etc. In the insurance sector, they help identify insurance fraud, automate claims cases, and improve risk management.
Why banks are opting for AI applications and services?
There are multiple reasons for the increased adoption of AI in the banking sector. This includes:
- The immense competition in the banking sector
- Push for process-driven services
- Introduce self-service at banks
- Demand from customers to provide more customised solutions
- Creating operational efficiencies
- Increasing employee productivity
- To help focus on profitability and compliance
- A vision to augment human work through the use of software robotics
- To reduce fraud and security risks
- To manage huge volumes of data at record speed and derive valuable insights
- To bring in effective decision making
AI, banks and chatbots.
By using AI-driven chatbots, banks can take their customer relationships and experiences to the next maturity level, as they help personalize UX in real-time and in the most efficient way ever.
Another AI product category that’s extremely popular among banks, and financial companies is a virtual assistant. Just like bots, they help walk the user through the bank’s services and products and, thus, improve the user journey, provide insights and set specific calls to action to increase goal conversions.
AI is the future of banking.
32% of financial service providers are already using AI technologies like Predictive Analytics, Voice Recognition, among others, according to a joint research conducted by the National Business Research Institute and Narrative Science.
Artificial Intelligence is the future of banking as it brings the power of advanced data analytics to combat fraudulent transactions and improve compliance. AI algorithm accomplishes anti-money laundering activities in few seconds, which otherwise take hours and days. AI also enables banks to manage huge volumes of data at record speed to derive valuable insights from it. Features such as AI bots, digital payment advisers and biometric fraud detection mechanisms lead to higher quality of services to a wider customer base. All this translates to increased revenue, reduced costs and boost in profits.
"JP Morgan uses AI to automate the analysis of loan agreements. The bank recently introduced the Contract Intelligence platform (COiN) which allows users to analyze such agreements, highlight the key terms and conditions, as well as critical data. Previously, this work required 360 thousand man-hours to complete."
Most of the banks are highly aware of the potential benefits of AI as it provides.
Enhanced Customer Experience – Customer service is at the forefront of any business. AI here can be leveraged to derive a better understanding of customers spending patterns that will assist banks to customize products by complementing personalized features and build strong relationships with their customers.
Effective Decision-Making Capability – Harnessing cognitive systems provide optimal solutions based on available data in real-time as it thinks and responds like human experts. These systems keep a repository of expert information in its database that allows bank managers to utilize it to make strategic decisions.
Future Outcome and Trends Prediction – AI assists banks to envisage future outcomes and trends as the technology has the ability to assess past behaviors. It also helps in detecting frauds, anti-money laundering pattern and make customer recommendations. As AI identifies these concealed actions, it supports in saving millions of amounts for banks.
Banks Will Have Trouble Acquiring AI Talent.
It seems that larger banks seem to have more robust AI applications in development and in use. This may reflect the tremendous difficulty of obtaining and retaining machine learning and AI talent. (From analysis of "Emerj" of the top seven US banks)
Companies like Amazon, Google, and Facebook not only have a more alluring reputation for innovation, but they also have much higher profit-per-employee ratios, allowing them to shower top talent with higher salaries and excellent perks.
It’s unlikely that even behemoths like JPMorgan Chase or Wells Fargo will be able to compete well against the tech giants in the AI talent war of the next decade.
For one, AI will dominate the area of digitization in the banking industry soon enough. Put simply, AI helps enhance customer experience, reduces human error, builds strong and loyal customers, helps in the movement of large cash inflow and outflow, etc. Therefore, it only makes sense for AI to remain present in the future of banking, as it will have significant contributions to the most valuable processes in banks.
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