4 Ways Artificial Intelligence Is Impacting Financial Services
Artificial Intelligence is making its presence felt across industries and the financial services sector is at the forefront of this evolution.
Banks and credit card companies already store huge amounts of customer information and AI will play a big role in putting all that information into action. While this would result in higher efficiency and improved effectiveness, it would also ensure better customer service, superior fraud protection, enhanced decision making, and smarter financial guidance.
Let’s take a look at the 4 ways Artificial Intelligence will impact the financial sector.
Better customer service
According to Gartner − By 2020, more than 85% of financial services businesses will manage their customer interactions without a human. With the introduction of Chatbots or ‘virtual agents’, customers no longer have to wait to ‘talk to an executive’ or ‘request a call back’. They can direct their questions to an AI-driven chat bot round-the-clock and expect a prompt and effective resolution. With Natural Language Generation (NLG), chat bots can now mimic human behavior and answer queries with a human touch. Not only will this boost customer service but also reduce costs and optimize resources by freeing up human agents to take on more complex tasks.
Machine learning applications have the ability to understand the need of each individual customer by analyzing the previous account activity and help the customer to make better product selection offered by banking & financial service companies.
Superior fraud protection
At some point, we’ve all received a phone call from our bank or our credit card company to check whether a transaction made on our account was fraudulent. In banking terms, this is called fraud detection. One of the biggest and the most sensitive challenges faced by financial services organizations across the world is preventing their customers from fraudulent activity. Considering that financial frauds exceed $50 billion in U.S. alone, that’s not surprising.
Artificial Intelligence can look for signs of suspicious activity that humans don’t. With advanced machine learning algorithms, businesses can now compare each transaction against the account history and identify anomalies such as out of state purchase, large cash withdrawal etc. and delay or block the transaction. It’s evident why AI-enabled fraud protection is already seen as a great benefit.
Enhanced decision making
Stock markets across the world are run by highly sophisticated trading algorithms. However, even though computer systems have already transformed stock trading over the last few decades AI is still limited to basic reasoning in these markets.
Machine learning is set to change this replacing trading theory based decisions with data driven decisions. Over time, these systems can teach themselves to become more efficient and to detect signals that represent an opportunity for better optimization. While humans will continue to play a critical role, an increasing number of financial transactions and decisions are making their way to computer systems. Predictably, investment in artificial intelligence and machine learning will be of great significance.
Smarter financial guidance
With Artificial Intelligence, banks can make investment recommendations and offer personalized investment strategies to customers. By analyzing customer behavior based on multiple parameters such as web activity, mobile app usage, etc., machine learning software can help predict the effectiveness of a marketing strategy for a given customer. This will enable more banks and financial institutions to predict customer preferences and offer customers the right products, at the right time.
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