How AI will transform the banking sector
ARTIFICIAL intelligence or AI has always generated a lot of buzz among leaders at tech conventions and industry conferences.
But, in recent times, the technology has been the subject of focus in economic forums, as banks and financial institutions are significantly impacted by the rise of AI and integration of the technology in that space.
Sensational headlines and trending buzzwords notwithstanding, some of the world’s biggest financial institutions are betting on AI as a technology and expecting it to enhance their offerings and serve their customers better.
Here are some of the ways AI will redefine the banking and financial services sector in the coming years:
#1 | Competitive financial instruments
In the digital era, consumers are empowered to compare and contrast financial products and services like never before. Therefore, providing them with a generic product will no longer cut it.
Banks have to deploy AI and leverage its predictive capability to forecast demand for specific products such as vehicle loans and home mortgages based on customer data.
The insights from the data then could be used to develop products that are both competitive, quick, easy to buy.
#2 | AI will power customizations
Competition enabled by digital solutions will put tremendous pressure on small and medium sizes organizations within the industry.
So, small companies that can’t offer services at lower costs because they don’t have scale will have to find a way to innovate and customize their products on a case by case basis.
The products have to be differentiated and specialized for these organizations to stay relevant.
#3 | Banks to adopt or drop out
Adaptability will essentially determine which organization will come out on top, in the age of AI, regardless of scale or reputation.
Even a big organization could be brought to its knees if it can’t adapt to AI or AI-related technology within its operations to become more cost-efficient and innovative in serving its customers.
Some emerging technologies aside from AI, such as the cloud network, blockchain, and RPA are already being deployed with gusto within the banking sector, and institutions that have not explored these solutions might soon find themselves left behind.
#4 | Enhanced open banking
AI, when combined with API-enabled open banking, will allow institutions to deliver enhanced value to their customers by offering them a one-stop solution for all their financial need.
Open banking will create a highly competitive environment and banks that make the most use of the available data and turn around to provide customers with the best, personalized products will have the upper hand.
AI will be a crucial technology to have at hand for that purpose.
#5 | More automated finance
Open banking and AI will also help put the customer in the driving seat in any financial transactions and banks that provide the best do-it-yourself solution will shine.
Developing fintech applications that complement financial products and guide consumers with their financial management is one way to enhance customer experience.
But in the future, banks may have to offer AI-powered solutions that further automate customers’ financial decisions and bill payments and provide real-time analyses of their financial health.
In short, the financial industry is being redefined and reshaped by AI as we speak, making it even more sophisticated than it already is.
And given the interconnected nature of the industry, organizations within this space that are struggling to adapt the technology or simply being hesitant are at the risk of falling further behind and may lose their competitive edge.