AI and the future of banking
Banking, Financial Services and Insurance (BFSI) is one sector that has been going through continuous technological disruptions. Every few months, a new trend is being adopted by this sector to make itself better. Most of these changes today are customer-centric and aim at enriching the consumer’s banking experience
About a decade ago banking in India was one of the most cumbersome fields as far as customer convenience was concerned involving long lines and lengthy procedures. Since then this sector has come a long way with automation, core banking, ATMs, online banking services, eKYC and much more serving today’s tech-savvy customer.
Since 2016, the sector has been hit by Artificial Intelligence, Machine Learning, and virtual agents. Several banks in the country and abroad have adopted robotics in some manner or the other to ease their processes, bring about workforce efficiency and ensure speedy delivery of services.
In India, leading bank SBI launched SIA, an AI-enabled virtual assistant specialized in assisting customers with everyday banking tasks that supposedly handles nearly 10,000 inquiries per second. Another leading bank, HDFC, has introduced ‘Eva’, which stands for Electronic Virtual Assistant.
Eva assists with providing information about the bank’s products and services instantaneously. Indian government’s Micro, Small and Medium Enterprises empowering initiative Udyamimitra.com launched EnlightBot coming from the IT company ESDS’ bouquet of offerings.
EnlightBot helps online customers with understanding the loan-acquiring process and utilizing other facilities of Udyamimitra. Similarly, internationally, Bank of America launched ‘Erica’ which specializes in recommending smart solutions to the bank’s customers.
However, the introduction of AI in banking is not just limited to chatbots. A lot of banks and financial organisations are using software robotics to ease backend process for achieving the better functional design. Global financial services firm JPMorgan Chase has launched COIN to analyze complex contracts saving almost 360,000 of man-hours.
It also handles IT access requests coming from employees. SBI is using AI to study, in real-time, the facial expressions of its customers visiting the bank’s branches to find out if they are happy or sad. ICICI, in the meanwhile, has deployed robotics software to ease over 200 of its processes across various business functions.
This has helped the bank in reducing the response time for customers, increasing accuracy and thus, boosting productivity.
What statistics say
Statistics and predictions undoubtedly point in the direction that AI will herald a transformational change in the banking industry. According to Capgemini, one robot can perform the tasks of as many as five employees. PricewaterhouseCoopers’ FinTech Report on India released in 2017 said that global investment in AI applications touched $5.1 billion in 2016, up from $4.0 billion in 2015.
Many analysis also counters job-defending technology-pessimists; Gartner predicts that AI will not make human employment obsolete but will create 2 million jobs by 2019. But to realize the full value of AI in banking, it cannot be applied in an unorganized piecemeal manner.
A workforce that can implement AI at the enterprise-level will be highly valued. Intelligent technologies should be used to create better work opportunities and that is probably the only way AI will bring about a long-lasting positive impact in the industry.
A mindset change will be more important in the time to come than just deep subject matter knowledge. Jobs will have to be enriched in reply to emerging technology being used as an aid to human intelligence.
Pros and Cons
Integrating artificial intelligence in the dynamic industry of banking and finance has several benefits. Some of these include accuracy, reduction in human error, cost cuts, scalability, etc. Another important activity that will become easy to perform with AI is data analytics.
Machine Learning can effortlessly process a large amount of data swiftly. Patterns can be observed and customer service can be enhanced accordingly. The right customer can be contacted at the right time with the right product.
Fraud detection will also become a cake walk since AI can immediately flag unusual transactions. It builds trust and creates a secure financial environment.
What lies in the future
Undoubtedly, AI will drive the banking and financial services markets of the future. This will only be possible if the industry is able to manage the security risk of AI systems.
A report by several US & UK experts on the malicious use of AI states that a range of security threats including cyber, political and physical arise with the growth in the capabilities and reach of AI. A proactive effort will be needed to stay ahead of the attackers, they feel.
Moreover, the success of AI will boil down to customer impact above anything else. But if AI cannot achieve that and instead confuses the user with multiple pre-laid steps, then there’s a problem.
What remains to be seen is how financial institutions will handle AI implementation in banking, and how it extends this service to customers. If banking intimacy is lost, then someone else will do it bypassing the banks.