How Banking Firms are Using AI to Engage with Customers
When we talk about some of the best digital transformation stories, the Finance sector always makes it to the list. Therefore, it is no surprise that it is a pioneer in the adoption of AI as well. The integration of AI has disrupted traditional methods and has changed how banks engage with their customers.
Artificial Intelligence has been progressing rapidly and is being used in almost every field of life. Not only can it manage a large amount of data without any chances of error, but it is also available round the clock and does not require any breaks. From hiring and screening of employees to the automation of industries, AI is everywhere.
Similarly, banking firms have also begun the use of AI in interacting with customers. Banks are employing AI to increase their efficiency and to deal more effectively with customers.
The pattern of interaction between the banks and customers has changed due to AI. The use of mobile banking is a significant contributor to the push for Artificial Intelligence in the banking sector. It is more convenient for customers to use online banking through their mobile phones.
We discuss some examples of how AI is being incorporated in the financial sector to enhance customer experience:
1. Personalizing Customer Experience
Banks engage in personalized customer experience by talking to the customers and making them believe that they can rely on the bank. Every consumer has a different need, and they have different behavior they show when they use the banking app. Because of machine learning, banks can now offer each customer a unique experience which suits their need. Since banks can now sort huge chunks of data related to customer history, including their demographic information and credit card information, the banks try to personalize the customer experience according to each customer’s individual needs.
Banks use AI to organize this tremendous amount of data and suggest related products and services to their customers. Some banks collaborate with software companies to get help in this regard. Thus, AI is used to personalize communication with each customer.
2. Use of Conversational AI
Conversational AI includes chatbots and virtual assistants; Banks are using automated responses to answer customer queries 24/7. A study shows that chatbots help the customer service agent to save up to 4 minutes of his time. Chatbots can easily tend to FAQs and simple demands of customers.
Some banks have incorporated advanced analytics that can give financial advice and make simple decisions on behalf of the customers. Virtual assistants provide services such as tracing expenditure and providing personalized financial advice.
Conversational AI increases customer satisfaction and enhances customer experience because it’s just like talking to a person. People can ask any question, they will get a smart answer based on their specific query.
3. Secure Online Banking
As has already been mentioned, banks have a large quantity of customer data, and most customers have been using online transactions, so it becomes important for the bank to protect confidential customer information. Here the banks turn to AI for making the online banking practices safe.
Since most of the banking is now being done digitally, the chances of fraud through hacking have greatly increased. Banks must make sure that the customer information is secure. Banks use AI to secure online banking practices. AI is used to analyze how the customers are using their apps and what kind of behavior they show while interacting with the app. If there’s any suspicious activity, AI will inform the concerned authorities. In this way, AI is making the customer dealings secure from fraud.
4. Automated Decision-Making Including Loan Approvals
Artificial intelligence can also be used to make business decisions automatically. The decisions that should be taken by an individual can be taken using AI, even the decisions that require higher-order thinking.
Banks have machine learning models that monitor the credit card history of customers. By knowing credit card history, AI can decide on whether to approve or reject the loan request of that particular customer. These machines decide whether a customer is creditworthy by analyzing the Internet activity of the customer. This analysis helps in selecting the most creditworthy candidates. Moreover, it can also predict which customer might fail to repay the loan.
However, debate arises on whether it is ethical to use such models for figuring out which candidates should be given loans. An AI model might be more effective than a traditional credit scoring system in a way that the more data that enters the AI model, the more accurate it becomes.
Challenges Faced By Artificial Intelligence In Banks
Even though AI is being utilized very frequently in banks, it still presents some challenges in its complete implementation. One of the challenges is that banks require a team of experts and a certain amount of money and resources. Some old school customers do not entertain the idea of online banking, which might become a hurdle in the use of AI.
Another challenge might be the actual implementation of AI. Employees become afraid that AI might replace them. In that case, the use of augmented Intelligence is suggested. Augmented Intelligence emphasizes that AI is only there for assistance and is employed to enhance human intelligence, not replace it.
Future Implications of AI in banking
Banks were originally designed to keep the money of customers safe. Nowadays, bank services have now become very crucial for customers. Banks provide different services, including checking accounts, transactions, saving account, credit cards, loans, and other financial services.
AI acts like a crimper tool between the bank and the customer as it connects them more closely. It has made it possible for banks to provide these services to the customers in a better way. Banks collaborate with technology companies, and make banking easier, aiding the customers. The use of AI has reduced risks and increased opportunities for everyone.
The need of the hour is for the banks to overcome the challenges that threaten AI integration into the financial sector. This will lead to a brighter future of banking and better customer services.