How Will AI Help The Financial Services Industry To Excel In 2023
The most demanding and fast-paced industries now heavily depend on artificial intelligence for boosting their productivity and providing an enhanced customer experience. This digital leap has equipped businesses to effectively employ AI to achieve better efficiency, profitability and make intelligent decisions using intelligent algorithms at reduced costs along with reduced turnaround time. The banking sector is one such industry where convergence between AI and FinTech is enormous.
Much ink has been spilled on the role of artificial intelligence (AI) in financial services. The worldwide AI fintech industry is anticipated to grow to USD 22.6 billion by 2025, according to research by Mordor Intelligence. A recent report released by FICCI in collaboration with PWC stated that AI has become a crucial component of the financial service sector in the post-Covid period and 83 per cent of Indian financial organisations believe that AI helps to improve their customer experience. More than 55 per cent of financial organisations strongly agree that using AI will provide them an advantage over their competitors. The second most popular use case in the financial services sector, fraud detection AI engines have been used by 65 per cent of respondents to improve safety and security. Additionally, according to the research, banks may save USD 447 billion using AI technologies by 2023.
In the coming year, role of AI in determining the efficacy of financial institutions looks very promising in a number of ways such as:
Risk Assessment:
Since the fundamental foundation of AI is learning from the past, it would but flourish in the financial services industry, where maintaining books and records is a crucial part of doing business. AI can be harnessed to collect information about an individual's loan repayment patterns to tailor the services being offered in a way that makes the institution feel more confident. Since banking is a data driven and data dependent industry, scanning through these records empowers AI with the ability to make the right recommendation of loan and credit offerings. AI is built upon machine learning which learns over time leading to lesser possibility of errors despite analysing vast volumes of data. AI has substantially established automation to areas which require intelligent, analytical, and clear-thinking. Know your Customer (KYC) is one such area where AI is competent enough to screen immense amounts of information and establish links between globally distributed personal and financial data. As a consequence, cost savings is huge too, making it a win-win situation.
Protecting Data And Predicting Anomalies
In the age of digital transformation, data is more important than ever before; And as we move into a new era of artificial intelligence (AI), data will become even more critical to the success of the financial services industry. That’s because AI has the ability to not only help protect data, but also predict anomalies that could lead to fraud or other financial crimes. For example, AI can be used to monitor customer behaviour and transaction patterns in real-time. This information can then be used to quickly identify and flag unusual activity that may warrant further investigation. In addition, AI can be leveraged to help verify the identity of customers and prevent identity theft. By using biometric data like fingerprints or iris scans, AI can authenticate customers with a high degree of accuracy. Finally, AI can be used to predict and detect fraudulent activity before it happens. By analysing historical data, AI can learn to identify patterns that are indicative of fraud. This allows financial institutions to take proactive measures to bust frauds even before it occurs.
Seamless Customer Service
In the financial services industry, customer service is critical. And, with the help of artificial intelligence (AI), companies can provide seamless customer service that is more efficient and accurate than ever before. AI can help improve customer service in the financial services industry with AI-powered chatbots. Customers can get answers to their questions quickly and easily 24/7. This allows financial institutions to redirect human resources to more complex tasks while still providing excellent customer service. AI can also help reduce human error in customer service interactions. For example, by using natural language processing (NLP), chatbots can understand customer queries better and provide more accurate responses. Additionally, AI can help financial institutions create more personalized experiences for their customers. For instance, by using machine learning algorithms, companies can analyse customer data and offer products and services that are tailored as per individual needs.
Reducing Operational Expenses
The paperwork is one issue that the banking industry will inevitably have to cope with. Each day, bank personnel must manage tons of paperwork. Such time-consuming, repetitive procedures might raise operating expenses and are more likely to have human mistakes. AI can be used to resolve this. It does away with these labour-intensive human operations. According to a study reported in Business Insider, banks might save as much as USD 447 billion by 2023 by transitioning to an AI banking system. For instance, banks may automate many facets of human work with the use of machine learning (ML), automation tools, and AI assistants. Additionally, AI is essential in enabling banking institutions to expand their current scope of activities, which lowers operational costs and opens up new revenue streams.
The financial services industry is under pressure like never before. With the rise of new technologies and stiff competition, customers are expecting lots more from their financial institutions. In such a challenging environment, it's clear that financial institutions need to find new ways to excel. The majority of the financial institutions have combined human ingenuity and AI’s capacity to learn rapidly from huge amounts of data, be it insurance firms or non-banking financial institutions. The rise and the impact of Artificial Intelligence in the fintech sector has been phenomenal and it will continue to redefine the way banks work in the coming year.
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