As fintech thrives, can AI make or break the banking industry?
The banking industry continues to be a proponent of emerging technologies like artificial intelligence (AI). While the pace of the adoption may be slightly slower than other industries due to regulatory concerns, the banking industry always looks for ways they can implement new technologies into their products and services.
Despite still relying on legacy infrastructure, the banking industry is slowly moving towards more reliability on the cloud, especially for developing, testing, and running new workloads. The industry is also now using more tools to derive more value and insights from their data while keeping a close eye on regulatory issues as well.
Here’s the thing: while technology has transformed the banking industry, it’s also disrupting it. The rise of fintech and the adoption of fintech by non-financial service providers are proving to be huge competition. Banks now have no choice but to increase their tech adoption as well and cater more digitized services to their customers if they want to remain relevant.
But how much technology can the banking industry use without compromising customer data and regulatory requirements? With AI bringing a whole new wave of possibilities to the financial industry, banks would want to be part of it as well.
In fact, according to an Economic Intelligence Unit survey, 77% of bankers believe that the success or failure of a bank will be attributed to their ability to tap into the powers of AI, and it’s not hard to see why.
AI’s ability to sift through big chunks of data will aid banks in providing wiser strategies and exceptional customer experiences. For instance, AI’s predictive analytics can streamline complex customer issues and synthesize a comprehensive solution, as well as also highlight internal business trends and suggest new market opportunities for the banking industry to pursue amid this economic downturn.
These advanced capabilities make it obvious that the banking industry’s investment in AI is crucial for its survival. Fintech companies are already leveraging AI to improve the customer experience, especially in providing them with products and services that are catered to their needs.
For Kanv Pandit, FIS’ Group Managing Director, APAC, Banking Solutions, the large banks in the region have often been at the forefront of adopting advanced technologies to enhance the customer experience, improve operational efficiency and strengthen their competitiveness in the market.
“AI is an area where major investments are playing out. Many banks have long been leveraging AI for predictive analytics. When paired with machine learning that allows algorithms to work through vast amounts of data, this kind of processing allows AI to find new market segment opportunities hiding in data sets and enables banks to offer suitable products to the right customers at an appropriate time, frequency, and manner,” said Pandit.
Pandit also pointed out that the recent spotlight on ChatGPT has once again highlighted the increasingly vital role that AI will play across industries. Specifically in the financial services sector, when integrated into the customer service system, such generative AI applications have the potential to further transform the way banks do business. This includes responding to more complex queries, and personalizing financial and product advice, for example.
Some examples of AI in implementation in the banking industry for their processes include Singapore’s DBS Bank. The bank states that it has created more than 100 AI and ML algorithms that analyze an internal data mart with 15,000 customer data points, to generate seven types of nudges that offer personalized product recommendations and celebrate customer milestones.
Another example is Japan’s Mitsubishi UFH Financial Group. According to a Nikkei report, the group will look to adopt generative AI-powered chatbots to help with reports and other internal tasks. Mitsubishi UFJ Financial Group will begin using a chatbot in the summer for drafting approval requests and responding to internal inquiries. The aim is to boost productivity by saving employees time and effort on cumbersome paperwork.
Japan’s Sumitomo Mitsui Financial Group also has begun trials on an AI chatbot developed in partnership with Microsoft Japan. It plans to initially roll out the tool to all employees of Sumitomo Mitsui Banking Corp in the second half of the year.
“As banks start to double down on their AI investments, we can expect to see more innovative use cases in the years to come,” added Pandit.
- Japan revamps semiconductor strategy as competition and geopolitical tensions heightens
- Internet accessibility and affordability still a hurdle in Southeast Asia
- Ransomware attacks sending shockwaves worldwide
- The Semiconductor Climate Consortium’s timely goals
- Is the Apple Vision Pro headset a real-life Black Mirror?