Between new governing laws, increased security threats due to fraud, and increasing pressure from consumers for better customer experience, traditional banking practices have quickly become outdated. To meet these challenges, banks have been turning to digital transformation to retain their competitive edge on all fronts, with early adopters seeing the greatest reward. Analysts and experts estimate that AI will save the banking industry roughly $1 trillion by 2030. According to Narrative Science, 32% of the participating banks in their 2018 report are already incorporating predictive analytics, recommendation engines, voice recognition, and response times in their processes. The greatest reasons more banks aren’t on board yet? Cost, the talent gap, and legacy systems continue to top the list. Banks with more than $100 billion in assets are 75% more likely to already be using AI, compared to 34% for those with less than $100 billion in assets. Despite the cost, the world’s biggest banks are delivering new ways to attract and retain customers, improve their processes, and save money in ways never seen before. Read on to discover five ways AI is revolutionizing the banking industry.
Ways AI is revolutionizing the banking industry
1. Fighting fraud detection and minimizing security risk
Thanks to the Internet and the introduction of mobile banking, banks are under increasing pressure to protect consumer data and assets from security threats. Identity theft, cyber fraud, terrorist transactions, and money laundering are all areas of risk. If you are a human auditor, there is an undeniable probability of error occurring. Because AI can analyze hundreds of transactions in real-time, there is less risk of an error occurring. Banks also experience faster decision-making thanks to the agile nature of artificial intelligence. , rather than long wait times as experienced previously.First impressions are critical, and you only get one of them. This mantra has become the driving force behind banks seeking new ways to improve their customer experience. But onboarding smoothly traditionally comes a high price, in fact, says that 92% of firms estimated that current Know Your Customer (KYC) onboarding processes cost roughly around $28.5 million each year. That’s a pretty penny for banks looking to cut costs while enhancing their customer engagement.Lately, the answer to improving onboarding and driving customer engagement has been AI. Using new technologies like machine learning and conversational AI, customers are able to gain quicker access to the information they need, without the need to visit the branch. Curious about the value of investing in better customer experience? According to , “for every one-point increase in customer onboarding satisfaction on a ten-point scale, there is a 3% increase in customer revenue.” For banks, that’s an additional $15 million per year in profit.
