AI usage is attracting customers towards digital banking. Making the shift towards artificial intelligence and digital banking is necessary for banks to stay up-to-date with customer expectations. Continue reading below to discover the benefits of AI usage and why your bank should make the shift.
Banks today sit on mountains of underutilized customer financial data. The recent introduction of Sahamati, the emergence of neo-banks and the changing expectations of a banking customer, have forced the incumbent banks to implement digitization of their services at scale.
AI, as a technology sits as a catalyst above this digital layer and offers transformative solutions to the banks in terms of improving process efficiency through automation, decision making, risk analysis, and to the customers in the form of enriched banking experience from an easy to open a bank account, to access to financial services tailored to suit their needs & demands. According to Mckinsey Panorama, almost 80% of financial institutions have partnered with a financial technology services provider in their efforts to adapt digitization & artificial intelligence.
While it is understood, the growing customer’s needs have forced many banks to embrace digitization, build easy-to-use simple user interfaces, offer better customer support integrating bots & human interactions; a lot more can be done to further enrich a customer’s relationship with a bank. And, artificial intelligence is widely perceived as a catalyst that could help banks strengthen relationships with their customers.
This article briefly covers the role of artificial/augmented intelligence in transforming the customer’s experience that helps banks to attract potential customers and retain their present customers, in the top 3 growing markets within the banking sector which is very important for better user experience which traditional Banking system is not providing it, are lending, wealth management, and transaction banking.
Among 900+ million Indians with access to banking, only 200 million have a credit score. Of which 26.5 percent of customers today use credit cards. While the traditional method of credit underwriting depends vastly on the markers such as a customer’s repayment history– which although is a good predictor of creditworthiness– is not ideal when intending to determine the creditworthiness of an Individual in an informal sector. In such scenarios, banks can build their credit underwriting capabilities by building predictive models to determine the risk, repayment ability, ideal interest & repayment periods on the back of AI. This can be possible by analyzing the financial behavioral history of the customer acquired through account aggregators.
Financial institutions today can make sense of voluminous structured & unstructured data to produce actionable insights, build predictive models, provide tailored stock recommendations, & portfolio management services, increasing the accuracy of key investment decisions. AI-enabled approach to wealth management eliminates the scope for human bias, intervention & error.
With a year-on-year growth of 6 percent, global payments revenue totaled $1.9 trillion in 2018. Banks today are increasingly using AI to improve customers’ experiences– from faster onboarding to payment processing. With the recent RBI guidelines enabling electronic KYC as a form of acceptance to open bank accounts, banks today are building capabilities to deliver an end-to-end digital banking experience without the need for a customer to ever step into a physical branch.
In addition, many banks have leveraged natural language processing technology to provide digital assistants for customer supports. The adoption explosion of UPI & UPI2.0 by NPCI has in many ways overpowered the utility of funds transfer services such as IMPS/NEFT/RTGS from the ease to transact to invest in the markets in a secure environment.
While, on the other hand facilitating banks with an opportunity to develop granular insights into customers’ spending habits, which was a limited possibility until a few years ago.
Artificial Intelligence is a meaningful evolution for banks to serve their customers better. Embracing digitization & artificial intelligence will not only help the banks continue to be relevant, but also provide numerous benefits in the form of reduced operational costs, & improved customer relationship.