Artificial Intelligence is more than just automating banking services. It’s the culmination of innovation and technology in an industry that relies heavily on automation. Customers can already perform many of their ATMs’ services and other banking requests on mobile devices rather than physically visiting the bank branch.
AI systems help banks save cost, improve RoI, and increase customer base. It is estimated that financial institutions that invest in human-machine collaboration and AI will boost their revenue and create new employment opportunities. BFSI firms in India have invested over USD 170 Mn in 2017 on AI related initiatives and are expected to invest over USD 4.5 Bn by 2025.
In order to fully benefit from the potential of AI, Financial Institutes in India need to accept that AI has the potential to rapidly transform their organization and the industry, work towards an enterprise wide strategy, and secure dedicated leadership support.
AI – An integral part of the BFSI ecosystem
The new banking ecosystem is based on the foundation of open banking, transparent blockchain based systems, and artificial intelligence. While still in the nascent stages of implementation, these solutions can significantly impact the cost and revenue structures of financial organizations.
BFSI firms in India are attracted towards AI based solutions because of their capabilities and changing business needs. Fueling this rapid advancement in AI and machine learning are key factors like –
- Explosion and availability of structured and unstructured data
- Ability to get cost-effective compute power that can run powerful algorithms inexpensively and process massive amount of data
- Rising pressures due to new competition (including new age Fintech companies)
- Increased regulatory requirements (like GDPR and Data localizations regulations)
- Heightened consumer expectations
Using algorithms and machine learning, AI software can help to both assess risk as well as manage repetitive processes at the back end, including completing and filing claims and applications.
AI has a much better RoI in the areas where there is an opportunity to deliver personalization and relevance at scale. As consumers engage with their bank and more transactions and behavioral insights are collected, the consumer expects interactions with their bank to be more contextual and personalized. This can also result in enhanced RoI for banks and other financial institutes.
A few key examples of AI implementation in BFSI include –
- Targeted customer acquisition systems
- Robo Advisors for wealth management
- Algorithmic Trading
- Chat-bots for better customer service, and
- AML and Fraud detection
Financial service organizations should be aware of how Artificial Intelligence can be applied to their business to help them gather data, understand their markets, and be more productive and profitable. More than a replacement for human intelligence, Artificial Intelligence can work in tandem with people to deliver greater business impact and increased customer satisfaction.
To know more, download our latest research paper titled AI for BFSI