Economic activities in the country have come to a complete standstill due to lockdowns since late March. The disruptions in economic activity have already started to take a toll on the banking system. Rating agency Moody’s has already changed the outlook for the Indian Banks to negative from stable. Financial markets are giving distress signals to investors.
Extraordinary times call for extraordinary measures. In these unsettling times, banks need to quickly implement the new-age digital solutions to deal with the economic shock of COVID -19. There is a growing need for banks to use Artificial Intelligence (AI) in the times of the COVID – 19 epidemic.
Implementation of AI in banking will translate into reduced operating costs and boosts profits. It enables consumers to enjoy the convenience of banking at their fingertips anytime, anywhere from their smartphones.
Banks are known to be the early adopters of the latest technology
Banking is still a manpower-led industry that requires human involvement for operations. Indian banks still need to reduce costs and expenditure on redundant tasks.
According to Autonomous, a financial research firm, the adoption of AI technology can help traditional financial institutions save 22% in cost by 2030.
Large banks are already leveraging AI to expand banking offers, make their operations more efficient and cost-effective, and offer greater value to their wider customer base.
Savings from AI in banking
Artificial intelligence has the power to identify and prevent fraudulent activities and improve compliance, For example, chatbots, digital payment advisers, and biometric fraud detection mechanisms can improve customer experience and reduce operating costs.
The operational cost savings from the implementation of chatbots in banking will reach $7.3 billion globally by 2023, up from an estimated $209 million in 2019, as per a new study by Juniper Research.
Here are how banks can use Artificial Intelligence to reduce operating costs.
AI-Powered 24/7 customer support – Chatbots
The majority of consumers believe that customer service plays a key role when it comes to brand loyalty. Time and resource constraints frustrate customers and mare customer experience.
A lot of customers expect banks to provide customer services 24 hours a day, 7 days a week, irrespective of the time zone. However, 24/7 service leads to numerous challenges such as hiring executives, training them, and arranging their shifts.
This requires a lot of money and eats a big chunk of a bank’s budget. AI chatbots can help customers at any time of the day, with a variety of tasks.
One of the primary benefits of AI in banking is the expanded accessibility for customers to avail of self-service. Chatbots interpret the context, detect emotion in the text messages, and respond to it in the most appropriate manner.
Customers can use the chatbots to seek ideal solutions to routine issues like accessing an account balance or finding fixed deposit interest rates. These AI bots enable banks to save not only time and free up resources within the organization, but also help banks to save millions of dollars.
And with Chatbots we can remove the linguistic barriers, as they can be trained to answer questions or have conversations in any language.
Prediction of Future Trends Using AI
AI technology helps banks predict future outcomes and trends by analyzing past behaviors through historical data. More the data, the better the predictions.
Banks use predictive analytics to identify fraud, measure credit risk, detect anti-money laundering patterns, and retain valuable customers. AI uses the power of machine learning and cognition to identify the money launders who portray the source of their illegal money as legal.
It also detects many other hidden actions and saves a lot of money for banks. Similarly, predictive analytics enable banks to successfully maximize up-sell and cross-sell based on the past behavior of data points.
Automation of Manual Processes Using Intelligence
Banks can perform repetitive, high-volume, and time-consuming work processes through software bots or use the new emerging technology called RPA (Robotic Process Automation).
Multiple banks use chatbots to help customers with routine issues and answer frequently asked questions. It allows bank employees to focus on greater, more complex, and value-added tasks that require a high level of human intervention.
Hence, the implementation of robotic process automation reduces operating costs by maximizing the available resources.
Reduction in Human Errors Using AI
Human errors are so common and of major concern for banks – errors not only postpone the release of a product but also can lead to a security breach and cost a bank a lot.
A 2018 survey by 2018 Verizon Data Breach Investigations finds human error as the major cause of financial data breaches.
One of the primary benefits of AI in banking is it enables automation of several costly, information-intensive, and error-prone banking services.
AI technology ensures accurate and quick processing of services at each step. It helps bank employees to avoid human errors in routine tasks while dealing with a high volume of customer interactions.
Other Benefits of AI implementation in Banks
Deployment of AI technology can help minimize the mistakes and lead to enhanced efficiency of the organization. For example, you can use an AI assistant to schedule calls and meetings and send you reminders.
AI enables banks to perform real-time regulatory checks for KYC on all transactions. As a result, the probability of human errors is reduced and banks don’t need to waste the budget on fixing mistakes.
It goes without saying that large banks are adopting AI in different segments of banking services – AI in commercial banking, AI in retail banking, and so on.
Top banks are deploying AI to stay ahead of the competition, provide enhanced customer experience, and reduce bank operating costs. AI technology will not only reduce costs and improve the efficiency of banks, but it will also make the automation efficient enough to end cyber risk.
Conclusion
As COVID 19 continues to impact the global economy, financial institutions will face tougher challenges to ensure business continuity. Communication and quick adoption of artificial intelligence technology will play a key role in making banking operations more efficient and cost-effective. Banks will have to take drastic steps to reduce travel and move on to remote businesses.
As banks have to resort to extraordinary measures to reduce operating costs in these unsettling times, artificial intelligence solutions will play an important role to relieve economic distress caused by COVID -19.
Deployment of AI solutions will give banks perspective about remote workforce and will continue to increase as a powerful strategy.