Artificial Intelligence: Meaning and Importance
Artificial intelligence (AI) is an upcoming technology in banking industry. Artificial Intelligence means the ability of machines to intermingle and learn to do tasks previously done by humans. Through AI the machines can interact and natural language can be processed faster which will help in arriving at the decision or results more accurately.
As more data is processed machines learn and improve themselves and arrive at a more positive result.
The need for AI is mushrooming because the characteristics of various data available, collaborating such data into understandable form, business needs, availability of new technologies and rising competition. AI helps businesses in such collaboration of data. As banking industry handles huge amount of data AI has become a necessity.
Artificial Intelligence in Banking Industry
Many banks around the globe are adopting AI technologies. The benefits of AI in banks are widespread, reaching from back office operations, compliance, risk management, credit management and to many more arenas. This adoption will help banks to gain a strategic edge over the other banks who are not willing to adapt the changes in banking industry including implementation of AI. Firms not willing to adopt AI, will be required to face challenges such as fear of system failure and regulatory compliance.
Importance of Data
Data is being collected, analysed and applied to solutions more extensively and faster than ever before. AI makes it possible to automate vast amounts of data, analysing and applying it at record speeds. The challenges that remain in banking sector is the absence of people experienced in data collection, analysing the same and arriving at the conclusion.
Advantages of Artificial Intelligence
As AI tends to be a new trend in banking industry it does have a few criticisms in terms of security and job loss, but it also has benefits attached. The following are the benefits of AI in banking industry:
Growing Personalised Customer Communication
According to the report on 2017 Retail Banking Trends and Predictions a renewed focus on the customer experience was observed. In another Digital Banking Report, The Power of Personalization in Banking, it was found that consumers were willing to share their personal information if they can receive custom advice, offers and service based on this shared insight. Personalized communications and advice as enabled by AI can be reflected by online wealth management services that provide automated, algorithm-based portfolio management advice without the help of a human counterpart.
Beyond online advising, many other of the larger financial institutions are using AI to improve the personalization of offers and communication. In future, it is believed that custom marketing and solution development to improve the customer experience will be the primary objective of the organisations.
Reduces Duplication of Work
AI can reduce the repetitive processes especially in the back offices of banks and make them both more efficient and effective. This reduction in duplication of work will helps the banks to focus more on customer communication and will also help to allocate and realign workforce where required. Earlier such personalization was almost impossible to achieve without the benefits of machine learning and AI. AI can handle customer grievances and “Frequently Asked Questions” with utmost accuracy.
Detection of Fraud
Banks are vulnerable to frauds. AI in banking can be used to detect frauds in real time. Using AI account activity can be monitored, patterns can be established, servicing of interest can be checked and any reservations can be communicated quickly. AI can respond to frauds quickly than any other normal procedure.
Growing Customer Recommendations
AI provides the ability to have improve customer recommendations and advice. Many mobile banking apps have been developed by banks to improve recommendations and advices to customers like Moven and Simple. They track customer’s spending and increase their savings with personalized recommendations via a debit card linked with their smartphone app. AI can make wonders in this segment of customer recommendations, as advice needs to be real time, the ability of humans to provide real time advice or recommendations related to products is poor. Hence AI without wasting time can arrive at accurate advice or recommendations.
AI the NEXT BIG THING
Banking industry is rooted in risk and fraud detection and cost reduction, AI is increasingly important for financial services firms to be competitive. Today most of the next generation customers are unwilling to go to the banks for any activity, they want to do it by just one click on the internet. In this changing scenario AI is going to be the next crucial innovation in banking industry throughout the globe. However, according Narrative Science, roughly 10% of the organizations are using AI to compete with peers and identify opportunities in their data that would otherwise be missed. This is just the tip of the iceberg. Certainly, ARTIFICIAL INTELLIGENCE is the “NEXT BIG THING” is banking industry.
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