How AI and Bots are Disrupting the Banking Industry
Artificial Intelligence is expected to permanently change
the banking industry in profound ways during the coming months and years.
Companies want to seek a competitive edge by implementing more technology to
achieve improvements in speed, cost, accuracy and efficiency.
In this blog we focus on the ins and outs of how AI will transform the industry, including in the office and with consumers.
Wanting to seek a competitive edge by implementing more technology to achieve improvements in speed, cost, accuracy and efficiency banks and financial companies are rapidly adopting chat bots – so much so that chat bots are now to be considered an industry standard.
Chat bots appear to be the beginning of AI for companies, using it mainly for customer service purposed through a variety of ways. Two of the most common ways bots are being used is through mobile apps and on the web as virtual assistants. Bank of America’s assistant, Erica, has made a path for the company to continue record-breaking growth.
“We want to be there for customers in the moments that matter most. Incorporating artificial intelligence into our mobile banking offering will help customers manager their simple banking need more efficiently and consistently, which then allows our specialists in our financial center to spend more time with customers to understand their more complex needs and help them improve their financial lives,” stated Thong Nguyen, President of Retail Banking for Bank of America.
Implementing chat bots also put the focus more on the customer and their needs, giving them many options – ranging from the choice to get help on a mobile device vs going to a branch, or deciding to talk with a bot or a human-being.
According to the Autonomous Next Report, millennial consumers are more comfortable using Ai to contact their bank or credit union without human interaction than are the later generations. Although, only 12 percent of Millennials prefer using a phone while all others turn to chat, social media or text channels.
AI and Security
AI is helping banks in a big way – it’s being used for security measures since laundering is a persistent problem in the global banking industry. Detection of fraud and risk management are the main ways AI is being used to help with security.
Artificial intelligence can detect fraud before it happens, alerting banks to be on watch and giving them a percentage that depicts the likelihood of a card ever becoming compromised. As a result this save banks and card providers money and prevents consumers from closing their accounts.
AI and the Organization of a Banks Inner Structure
Banking and lending will see the biggest transformation with billions in savings and millions of jobs at risk, according to the Autonomous Next Report.
This will cause a major shift in the banks inner structure.
Bank tellers with repetitive tasks may be the first to go as machine learning becomes more advanced, followed by jobs in the middle office but with less jobs to be replaced in the back office. One trillion dollars can be saved across banking, investment management and insurance when leveling out jobs with automation in the front, middle and back offices.
Out of banking and insurance, it was reported that 70 percent of jobs at risk will be front office to be replaced by chat bots, automated authentication and biometric technology. On the contrary, data also suggests that proliferation of AI will be accompanied by a rise in banking jobs by 14 percent. Companies will be recruiting people who know how to work with AI. Accenture sees AI as being a way for liberating humans to be able to work on more interesting and complex jobs.
Other Technological Trends
AI isn’t the only technological trend that is said to be disrupting the industry. Extending reality, data veracity, friction-less business and internet of thinking (IoT) are all disruptive driving factors to banking and insurance companies, according to Accenture.
- With extending reality, companies can look at creating competitive differentiation by overlaying the real world with digital enhancements to extend human reality.
- If a bank fails to verify the authenticity of the data then they are vulnerable to draw business insights or make decisions that can get them into various unwanted messes by using data veracity.
- Friction-less business is all too common – too many partnerships can cause outdated systems that cannot keep pace and are becoming a barrier to growth and future readiness.
- By using IoT banks are able to collaborate with telecom service providers and analyze data share with consent in real time.