We are living in an age of constant disruption and the latest technology to disrupt every industry is artificial intelligence or AI, as it is often called. AI has been around since 1950’s, as part of the science folklore and fiction. For being the exclusive domain of robots to graduating slowly to smart machines, intelligent web technologies, e-commerce and eventually to self-driving cars. Currently, AI is impacting every possible industrial sector and the ripples are to be seen in the financial services sector too. It will be an understatement to say that the financial services sector is in the midst of a technological disruption. For sure, the current problems cannot be solved by yesterday’s technologies.
Artificial intelligence is a perfect fit for the financial services sector. This sector has traditionally been data rich and that’s a perfect pitch for AI and ML technologies to thrive on. While banks have adopted artificial intelligence, it’s the Fintech companies who are making the most out of AI. In fact, many fintech companies worldwide have business models solely based on artificial intelligence algorithms. These nimble Fintech startups deploy their proprietary algorithms and integrate it with the lending systems of banks and other financial institutions, thus ensuring real-time processing of data.
Financial services organizations have realized they have a head start with the application of artificial intelligence, mainly because they have large data sets and deep experience with big data analytics. No wonder, every customer-facing frontend and backend processing tasks are being exposed to AI engines to make smart, quick decisions without any human interference.
Engaging with customers with a deep level of personalization has always been the holy grail for marketers and customer service departments. Artificial intelligence has enabled financial institutions to enhance the degree of personalization and engage with customers and prospects at a deep level. Virtual assistants, smart chatbots, dynamic content, hyper personnel product recommendation engines have boosted customer experience to an altogether different orbit. Customers are happy they get the information they need at their fingertips in real time and they don’t need to visit physical branches or join telephonic calls with long holds. For the banks, any investment in technology which improves the customer experience at lower overall costs is welcome. No wonder, the race to using AI seems never-ending.
AI has the cognitive ability to detect fraudulent behavior, predict fraud and prevent fraud with timely intervention. The cognitive insights from an AI engine extract structured and unstructured data from multiple sources and find answers. Currently, used widely to flag frauds, artificial intelligence is self-learning and improving with every passing day.
Many banks and financial institutions have deployed artificial intelligence to engage existing customers with relevant marketing offers, upsell products and services and also signal potential customer churn. Customers actions and trends are not analyzed by traditional workflow based engines but with smart AI engine for accuracy and relevance.
Bankers are not interested in knowing if AI is really disrupting the financial services sector but are keen to see the real impact it’s making to the bottom line. By automating frontline tasks, financial institutions will significantly reduce costs and boost revenue. Expect to see more AI deployment on major frontline activities in the coming months and eventually customers will get used to chatting with a chatbot as much as they are now used to transacting with an ATM and not a teller anymore.
Traditional loan appraisal models deployed by banks have their limitations. In the absence of credit history and other regular documents, retail and SME borrowers can’t avail bank finance and have had to resort to other means. But a couple of Fintech startups with deep integrations with banks and smart algorithms are able to do matchmaking between borrowers and financial institutions at an unprecedented scale.
Borrowers are now able to access financial products like personal loans, insurance, mutual funds, business loans at ease with zero paperwork, instant approvals, and quick disbursals. Thanks to the AI-powered decision-making processes deployed by these new age Fintech startups.
Meeting Regulatory Requirements
AI is also being used by financial institutions to meet regulatory requirements, flag issues in real time and detect potential fraud.
AI has been successfully leveraged by Fintech startups like Rubique to acquire new customers and upsell relevant products to existing customers. The rich customer data and bank credit policies mapped to their proprietary AI based matchmaking and ranking algorithm provides a customized list to each consumer based on his need and profile. As a result, there are higher approval rates for loan products, better customer satisfaction and improved sourcing to financial partners. the self-learning algorithm continues to improve and drive higher values.
AI adoption is growing at an unprecedented pace within the financial industry. It is still the early stages of adopting promising AI solutions but the future looks highly rewarding. The real disruption will require much more than simply AI on top of yesterday’s technologies. The winner who takes it all will be one who rebuilds their tech architecture with AI at its score and designed to provide customer-centric solutions that drive customer loyalty, engagement, consumption and satisfaction.