The finance & banking sectors have positioned themselves at the forefront as one of the most developed sectors globally. They are forever willing to innovate and invest in new technologies, and the past decade has seen major investments in developing digital accounts, person-to-person (P2P) payments, advanced Customer Relationship Management (CRM) practices and more recently lots of investments in artificial intelligence (AI) and block-chain.
AI has a lot of value to bring so it was no surprise when it quickly ushered the new-age financial market. But there are often misconceptions about the role of AI in finance because of its presumed limitations. For example, AI is usually just associated with data analytics, but it’s got a far bigger role that it can play outside of data automation.
AI provides a change in the way customers interact with services. It provides a remedy for the daily challenges that banks face, such as fraud prevention and anomaly detection. We are in the “I WANT IT NOW” era. Consumers want quick solutions to their problems, and due to the volume of online transactions, it’s costly and time-consuming to be handled entirely by a human workforce.
But despite many advancements, this is just the beginning for machine learning and AI in banking; we have only just scratched the surface. Here are some more ways we can leverage it.
Let’s Start with Behavior
Behavior is a key pattern that must be tracked in banking, especially because of the growing transactions conducted online through e-tailers and alternative payment providers, such as PayPal. Each bank defines fraud guidelines differently and these can only be determined by understanding the consumer behavior that’s displayed at your particular institution.
A fraud detection startup based in the UK, Ravelin, uses a unique blend of neural networks and algorithms to basically mimic the human brain. Each individual vertical in that algorithm defines a different aspect of human behavior, such as how long it takes to ‘window shop online’ or how long it takes to enter your card details or your address. Together, they create a metric for each bank that helps them flag a fraudulent interaction.
For example, the threshold for fraud detection at a local bank such as Emirates NBD may be different from the guidelines at Abu Dhabi Commercial Bank because of the unique consumer patterns they’ve observed. Behavior – very important for AI in banking!
Moving on to Something We’re Familiar with – Mobile banking
By digitizing the banking experience, the bank reduces its operational costs, creating a convenience-driven solution for consumers with a direct line of communication with the bank through the support of push notifications. The future of mobile banking is something that’s been heavily debated because of concerns around cybersecurity and data protection. But here’s the flipside – the tech sector is growing rapidly, now more than ever, and large investments are being made to perfect the digital world.
The role of AI in mobile banking addresses just that. With fingerprint scanning, voice recognition, facial recognition (and even iris scanning at times!), AI solutions create a robust biometric support for online security. Barclays has enhanced its security offerings by partnering with the Japanese digital solutions group, Hitachi. These futuristic technologies are readily available to us thanks to our smartphones, and modern banking solutions will be prevalent on most smartphones by 2024 (Juniper Research Data).
Customer Service Will Continue to Evolve
Due to their segmented approach and ability to target different audience niches, customer service will become even more personalized. For example, based on a client’s purchase decisions and transaction history, AI can create customized recommendation models that specifically target you based on your individual needs and wants.
AI is not only a cost-effective, time-efficient solution to the daily problems faced by anyone in the financial sector or even the consumer, but an all-rounded protection of our finances. We’re at the cusp of an AI breakthrough in the financial sector. It plays on, and improves, our basic, fundamental building blocks – customer service, security, behavior, and I’m just as excited as you to usher in this new era of banking.