5 ways financial institutions are making the most of AI technology
Financial institutions are embracing tech such as AI (Artificial Intelligence) in a big way to revolutionize activities such as customer relations, fraud detection and compliance amongst others.
It’s estimated AI will save the banking industry $1 trillion by 2030, so it’s not surprising they’re jumping aboard.
Ironically for an industry that relies heavily on systems and IT, at a time when even small businesses can use modern software to automate their financial admin including salary and wage reporting and inventory control, many financial institutions have been using systems based on tech dating back to the 1970s.
This is changing now though as banks and others replace tech that has become inadequate for the modern financial world.
So how is AI helping financial institutions?
1. Customer service – use of chatbots
You may think you’re talking to a ‘real person’ when conducting chat with your bank, but can you be sure? It may be a chatbot courtesy of AI tech.
It makes efficient and personalized customer service and relations possible without the labor intensive nature of manning support desks and phone support.
Not only this, but AI can help human customer service personnel and management; for the person ‘at the sharp end’ of customer service AI can detect certain emotions in the customer’s voice and ‘report’ this to the operative so they can handle the call better.
For management, AI can evaluate the performance of the operative based on certain parameters.
2. Fraud detection more accurate and effective
Sophisticated data analysis and the use of advanced algorithms are improving fraud detection both in terms of uncovering fraudulent activities and not ‘over reacting’ when others are false flags.
For example, some of the more primitive and over-zealous automated fraud detection facilities might block a customer’s credit card when there’s no reason to. Advanced systems possible through AI will be able to use far more accurate and sophisticated analysis to assess whether fraudulent activity is in progress or not.
Similarly, the same AI based tech can spot fraud that may have slipped through the net previously.
3. Investment analysis and financial portfolio management
The money and share markets are benefiting from AI in the way advanced algorithms backed by huge data analysis and manipulation can help forecast how markets are performing and where they’re headed.
Similarly, those with funds under management are benefitting from ‘robo advisers’ that assess how their money and stock is performing based on the customer’s investment parameters.
These automated advisers not only ascertain where money should go for best effect, they can be set to physically switch funds in and out of various accounts and income vehicles.
4. Product sales and recommendations
As with Amazon with its “you may also be interested in” messages appearing on product pages based on customer purchasing and page view history, so financial institutions can refine and tailor product offers to the specific customers most likely to be interested and who qualify for them.
Instead of the sometimes ‘blunt instrument’ way financial products may be offered, a more bespoke approach can be made to certain customers.
Indeed, AI is set to revolutionize marketing in general such is its ability to run, test and analyze the effectiveness of marketing activities.
5. Compliance obligations
In the wake of problems and issues of the past, financial institutions are subject to huge levels of compliance with stiff punishments meted out if they fall foul of regulations.
AI is helping institutions with their compliance by analyzing and interpreting voice conversations, outgoing emails, text messages and other communication methods to flag up potential compliance issues before customer contact is made.
AI is helping in many other ways; automation is one – documents such as loan applications can be processed far quicker thanks to AI, and it can help in an institution’s reputation management activities. By monitoring what is said on the web including social media, AI can flag up when adverse comments and content needs addressing.