How is AI changing the banking industry?

Both challenger and traditional banks are growing their focus on helping consumers save money. As customers increasingly look to save money for a rainy day and become more fiscally responsible, many banks have reacted by providing a variety of services.

According to a 2018 report published by the World Economic Forum, in collaboration with Deloitte, 76 per cent of Chief Experience Officers in the banking industry agree that AI is a top priority because it is critical for differentiation.

Traditionally, these services included basic budgeting apps or digital tools, but AI is now being deployed to help segment different payments, provide suggestions to customers based on payment history, offer a source of advice, and a resource for answering common customer queries via chatbots.

Artificial intelligence in banking is used to establish more meaningful conversations with customers by solving real problems and managing finances.

How are banks utilising state-of-the-art AI to support customer interactions?

Consumers are not realising their full saving potential because banks are generally still learning to understand their customers’ needs. With most banks still running on legacy systems, it can prove a struggle to complete complex transactions beyond money transfers and deposits.

AI, however, will allow banks to focus on their customers by leveraging the data that they own to gain essential insights. This will in turn allow banks to personalise and enhance the customer journey, making it as frictionless as possible, by manipulating the data to offer real-time recommendations.

Even older consumers, who may not be as tech-savvy, will be able to process their banking transactions quickly and easily via a smooth online experience. AI can be used to create a smarter, personalised user experience.

For instance, it can be used to track data such as a customer’s spending and purchase history over a period of time to help the bank send relevant information regarding budgeting and saving. By offering consumers an individualised service, the bank is able to increase customer satisfaction and retention, creating mutual value for the customer and the bank.

Successful AI applications in banking means putting to good use the massive amounts of data collected, no matter which channel it comes through, even if it’s via ATMs, web channels, digital wallets, point of sale activity or mobile devices.

It allows for personalisation; digitally transforming a mass service into an individualised and customised one, based on a customer’s unique behaviour, preferences, and requirements. This is what also gives banks a competitive differentiation – improving compliance, increasing customer engagement, and optimising the overall operational efficiency.

A tailored approach

In order to provide a sustainable high-level of customer engagement, banks need to gain full visibility of a customer’s history to understand their personal banking habits and needs. Banks therefore require an integrated enterprise system that consolidates customer data from all sources, from apps and APIs to third parties, which can then use AI to provide real-time recommendations to increase loyalty, retention, and value. This combination of AI and omnichannel decisioning can add value to the overall customer experience.

Real-time transaction analysis is crucial, it enables banks to collate data and track transactions at low latency. This not only gives banks a better view of their customers, it would also give them the dataset required to apply AI and deep learning to provide personalised, value-added products to customers as it learns about spending habits over time.

With all this information, banks can now deliver curated financial services and advice better than ever before with the help of AI-based decisioning. By tapping into customer profiles and preferences, banks can package products and services together based on personalised needs.

There are various applications of artificial intelligence in banking. For example, already a growing number of start-ups, such as Trussle and Habito in the UK, that are looking to use machine learning algorithms to help customers find the best mortgage product on the market.

Banks can now develop more products affiliated with greater customer loyalty and lifetime value. Whereas for consumers, they can benefit from the convenience of working with a trusted organisation that understands their personal requirements. As the adoption of AI-based decisioning tools grow, relationship managers will be able to more accurately and consistently assist a customer with the best products and services for managing personal finances.

Relationship managers will also be able to analyse a customer’s banking experience on existing channels. Doing so will allow banks to determine how effectively their current processes operate, whether there are any bottlenecks for instance.

They will then be able to model and implement process optimisation across all of their physical, web, digital, and mobile channels to serve customers more effectively, and provide an enhanced customer experience.

UK consumers can now solve personal finance problems much more easily

When a human point of contact isn’t always available, AI-driven virtual assistants or chatbots are able to respond to customers’ simple banking needs. From identifying funds in a customer’s cashflow that can be automatically moved to a savings account, and alerting customers to any unusual activity in their accounts, to providing personalised financial management insights and advice.

AI-based decisioning can ultimately help banks expediate workflow, reduce the volume of customer calls coming into the call centre, and improve customer service.

Smart use of AI means viewing banking operations through both an automation and augmentation perspective. Banks can use the insights gained from the deployment of their chatbots to improve bankers’ productivity and their interactions with customers.

By allowing consumers to have more time and contact to discuss complex personal financial management queries – which chatbots cannot answer – with their bank and portfolio managers banks will be perceived as a trusted and credible source of financial advice.

Banks using AI can achieve a more informed banking environment that not only provides customers with assistance and insights, which in turn gives them greater control over their personal finances, but also an added sense of financial security.

Chatbots have evolved to a point where they have developed a level of human intelligence. As a result, they can offer an emotionally connected experience for customers who are in the process of making important life decisions.