Artificial intelligence (AI) is taking the industry by storm, improving customer service, boosting safety transactions, reducing missed payments and battling financial crime
Much has been made of the capabilities and limitless potential of artificial intelligence (AI) throughout 2023. From threatening our jobs to powerful new solutions – AI is reshaping every sector.
Finance and banking professionals will be keen to find out how AI can generate and save money during day-to-day operations. So far, the financials are in favour of AI investment, but how will AI reshape the sector for not only those working within it, but its customers too?
Jeremy Baber, CEO of Lanistar, comments: “AI solutions enable banks to enhance customer experience and develop a generation of products and services to suit customer needs. Enhancements include chatbot use, enabling customer service anytime, anywhere, and identifying specific user consumption patterns to remain aware of criminal activities. As AI continues to dominate, banking and fintech professionals must be aware of the emerging technology and how it will shape the industry in the near future.”
Traditional banks have started introducing AI-powered chatbots, guaranteeing around the clock access to customer service. As AI chatbots continue to advance, new levels of conversational banking have appeared, with queries being answered instantly through real-time conversations and aiding customers in their decision-making. A recent report from IBM revealed that AI-powered chatbots are reducing customer service costs by as much as 30%.
Baber continues: “AI chatbots enable banks to answer simple, frequently asked questions from customers, such as branch opening times, account-related issues and how to unfreeze credit cards.”
According to Statista, 93% of the UK population used online banking in 2022, leaving many vulnerable to attack as demands for the banking industry to optimise its fraud detection efforts continue to increase. AI and machine learning enable banks to pinpoint fraudulent activities by tracking systems loopholes, reducing risks and improving security.
Baber continues: “New AI models have enabled banks to identify specific user spending patterns, helping banking teams act faster when suspicious transactions are detected.
“So, it’s no surprise to see AI tools which combat financial criminal activity being embraced by banks to bolster security. They are constantly learning, analysing transactions and recording suspicious cases to give banks the data they need when they need it. This includes the analysis of a transaction amount, the currency, the destination and the type of transaction, allowing for a more proactive approach.”
Banks such as TSB, Lloyds, Halifax, Natwest and Bank of Scotland have adopted AI tools from Mastercard to tackle fraud. These models have helped to prevent identity theft and flag criminal activity such as money laundering, with 33% of AML professionals stating that AI and machine learning are the most effective methods for preventing money laundering, according to a recent survey from Feedzai.
Baber continues: “A common issue across the banking sector is the rise in missed payments, which is a particular challenge during the cost-of-living crisis. To tackle this and better support customers, AI tools can examine spending habits, alerting customers that they could run out of funds to meet scheduled payments.
This provides a balance of offering a personalised service and encouraging improved financial management whilst reducing the risks of falling short of funds to settle scheduled payment obligations.”
Baber concludes: “AI solutions can drastically improve processes and services and battle back against criminal activities across the banking sector with the innovative and cost-efficient solutions AI models provide being better understood by banks.
“In the coming years, we should expect to see an increase in the use of AI in the banking sector, both for business growth, security and customer relations. The adoption of AI is building on the quality and service, offering better methods to improve customer experience and fraud detection and simplifying, speeding up, and redefining traditional processes to make them more efficient.”
