There’s no denying that almost every facet of life is aided by technology nowadays. Even the financial services industry, often regarded as a technologically outdated industry, is changing.
Artificial Intelligence (AI) in banking is a hot topic in various C-suite offices in the financial and business realms. More and more financial institutions are heavily investing in technology to keep up with the changing demands of customers.
Read on to know more about the direction the financial services industry is heading.
The Shifting Trends in Financial Services
Trends quickly become industry standards, and consumer-friendly technology is getting a new lease of life in the financial services industry. Naturally, AI is at the heart of this.
As we move forward in 2022, let us look at 6 AI trends that are on course to take the world by storm:
- The rapid growth of private cloud in banking.
Big data and AI necessitate a lot of computer power; banks are increasingly becoming cloud-reliant in hosting their data and applications. The cloud is not only scalable to meet enormous processing demands but also cost-effective.
As per IDC’s report, global spending on cloud services would reach $1.3 trillion by 2025, rising at a 16.9% CAGR. Both public and private clouds are expected to grow, with private clouds growing at a quicker pace.
By 2025, half of all tier-one Asia Pacific banks will have moved their data warehousing and analytics activities to the cloud. [*IDC]
- Stronger AI governance to prevent tangos with the government.
AI is a major priority for banks due to its computing power and large datasets. However, there is an increasing need to look beyond specific use cases. AI development and deployment must be improved and operationalized with strong AI governance and automatic upgrades.
To carry out a bank’s AI plan, AI engineers consider a holistic approach crucial for delivering the hyper-relevant offerings and information that customers expect while avoiding tangos with governmental entities.
According to Gartner, by 2025, 10% of companies who develop AI engineering best practices will earn 3 times the value from their AI initiatives than 90% of companies that do not.
- Chatbots will improve customer service.
Customer service is successful when a customer has a positive interaction with a company. Companies employ conversational AI, voice bot AI, or chatbots for customer service. Chatbots and voice bots are being adopted quicker as personalized services are becoming increasingly important in banking. These AI-powered tools enable companies to respond to consumer queries quickly.
AI in Asia will redesign support services with a broader reach and smoother resolutions. RBL Bank, an Indian bank, has expanded the capabilities of its AI-powered conversational chatbot ‘RBL Cares,’ adding a slew of new functions. The Mumbai-based bank’s chatbot can help customers with a variety of banking-related queries in real time.
Amy, an offering from HSBC Bank (Hong Kong) customer service is a Virtual Chat Assistant for banking. Amy responds to customer service requests in real time, 24/7. Available in both English and Chinese, it has given users easy access to information about a wide range of services.
- Individuals with low incomes can engage in the capital markets.
A capital market is where traders can profit from long-term investments in bonds, equities, etc. Capital markets were, typically, exclusive to the power brokers. Thanks to AI promoting inclusivity, even a low-income individual can now participate in capital markets. Although challenges occur when expanding these product offerings to a more extensive set of investors, learning about the risks beforehand would allow interested entities to participate in investments.
- Prediction of the likelihood of failure in settlement processes.
Settlement failure is costly for both banks and their clients. Failures disrupt trading strategies and act as a barrier to seamless custody service. Multiple failures can even affect the reputation and lead to much larger fall-outs. AI technology can be leveraged to predict failure possibilities based on specific features and historical settlement data.
Autonomous Next research by Business Insider Intelligence predicts that the overall potential cost savings for banks from AI applications will be $447 billion by 2023, with the front and middle office accounting for $416 billion of that total.
- AI will eliminate silos and power more holistic experiences.
Customers will not have to search for insights into their mortgage, savings, or investments. Customer service channels should proactively serve these insights, and AI can facilitate that.
AI is undeniably improving CX in the financial services industry for the better, and FIs may use these emerging trends as a springboard for future success.
AI is increasingly being used for good, from healthcare and environmental modeling to financial services. Data is our most potent weapon in the fight against inefficiency, inequality, and injustice, and the key to maximizing its potential is AI.
Financial institutions are using AI to help shape the future of finance for their consumers and clients. Thousands of applications will eventually be AI-enabled. It is clear as day that the financial institutions who invest in enterprise AI transformation will gain market share, enhance customer satisfaction, and improve their financial performance over those that do not.