Artificial Intelligence (AI) — and its growing impact on and applicability for individuals and businesses alike — is one of today’s most widely discussed topics. From virtual assistants like Siri and Alexa, to chatbots created by Facebook and Drift, AI is having a significant impact on the lives of consumers.
It is readily apparent how AI-powered technology is making inroads into everyday life through DVAs and other consumer products, but AI is also having a transformative effect on an industry that impacts virtually all consumers and businesses: banking. Here are five ways that AI is already transforming the banking industry.
Consumer Service Automation:
As natural language processing technology evolves, consumers find it increasingly difficult to distinguish between a voice bot and a human customer service representative. This stems from improved abilities on the part of voice and chatbots to resolve customer issues without human intervention. In fact, voice and chatbots often work best when augmenting rather than replacing humans. At a minimum, the option to speak to a human, if necessary, should be readily available.
Banks have access to a wealth of customer data, including detailed demographics, website analytics and records of online and offline transactions. By utilizing machine learning to integrate and analyze information from multiple, discrete databases to form a 360-degree customer view, banks are better positioned to personalize products, services and interactions based on the behavior of individual clients. While personalized pricing of this kind may only become prevalent in the future, banks are already utilizing AI-processed behavioral data to advise individual clients on appropriate credit and savings products, based on their goals and habits.
In the banking and payments industry, personalization extends far beyond marketing and product customization, into security. A growing number of banks are utilizing biometric data, like fingerprints, to replace or augment passwords and other forms of client verification. In a widely discussed innovation to its popular iPhone, Apple has evolved its Face ID so that it now uses AI-powered facial-recognition technology to unlock the device as well as validate purchases using Apple Pay, its digital wallet service. As facial recognition and other biometric authentication techniques become more sophisticated and secure, they are poised to become increasingly commonplace.
One of the most promising applications of AI in banking comes from automating high-volume, low-value processes. In one example, reported by McKinsey, JPMorgan began using bots to process internal IT requests, including employees’ attempts to reset their work passwords. And Intelligent Automation has caught up and driving process optimization.
Pattern recognition and fraud prevention
The ability of AI to sift through massive amounts of data and identify patterns that might elude human observers is one of its greatest strengths. One area where this capacity is particularly relevant is in fraud prevention. According to McAfee, cybercrime costs the global economy $600 billion. AI and machine learning solutions are being deployed by many financial service providers to detect fraud in real time. An additional benefit of improved fraud prevention technology is that legitimate activity is flagged as fraudulent less often.
The fintech revolution is still in its infancy, but alongside AI, it has already had a substantial impact on the way traditional banks do business. This presents digital entrepreneurs and investors with myriad opportunities for improvement.
Having a high-level understanding of the goals big banks are looking to achieve with AI — including customer-service automation, personalization, improved security, process optimization and pattern recognition — hopefully provides food for thought and inspiration for digital entrepreneurs attracted to the fintech space.