Influence of Artificial Intelligence on the Banking and Financial Services sector: Key Insights
In this AI-powered age, improving customer service, better connectivity, and regulating operational costs are some of the desired advancements that industries in the BFSI sector look forward to. According to McKinsey & Company, Artificial Intelligence in Banking and Finance potentially could unlock about USD 1 trillion in value generation in the sector [1].
Being an early adopter of AI, the BFSI sector has now been using several individual technologies such as voice recognition, predictive analysis, and automated chat services (Allied Market Research). Disruptive AI technologies predicted enhancements to occur for rapid innovation, increased profits, better personalization, and provision of omnichannel business automation. In fact, about 32% percent of banking respondents and 36% of insurance respondents expect AI to be a “game-changer” for their enterprise in 2021 [2]. And in the future, an additional 25% of banks and 23% of insurers plan to deploy AI in the next 12 months [2].
This blog elaborates on how Artificial Intelligence is influencing players in banking and financial services and provides insights about Simplifai’s AI-powered Digital Employees and how they can be a cornerstone of AI adoption in the BFSI sector.
Artificial Intelligence in banking and finance: post-pandemic growth spurt
The use of Artificial Intelligence is not new in BFSI. Approximately 25% of banks and 31% of insurers were already deploying AI in 2020 [2]. However, before the Covid-19 pandemic, banks and other financial service organizations did face some obstacles while moving from traditional operating systems to AI-based business automation. Lack of a clear strategy, funding, inability of incumbent systems to scale up with new tech, and unstable regulatory mechanisms were prime hurdles for the same.
However, contrary to expectations the post-pandemic times led to an enhanced growth rate of AI in the BFSI sector against these obstacles. For example, 35% of banks reported after the first pandemic wave that AI had a positive impact on technologies that support remote working. With work cultures shifting to remote and hybrid operations, many players in the industry have moved to AI and Machine Learning powered tools for automating daily processes. In fact, just during the initial stages of the Covid-19 pandemic, the use of mobile and online banking facilities increased by almost 50%, consequently leading to a rise in digital banking services [2].
These scenarios set up the main drivers for Artificial Intelligence in banking and finance, which are – preserving brand reputation, adhering to compliance requirements, and maintaining consumer trust. Whereas the use-cases of these drivers include process automation of operations, product pricing, customer self-service, and supporting complex decision-making strategies [2].
Key Artificial Intelligence technologies in banking and finance
After proving that AI-based automation can handle several day-to-day tasks in BFSI at a scalable level, there are a handful of AI technologies being used consistently in the sector. At the front office, conversational bots for customer service, automated document handling, facial recognition, and micro-expression analysis, are some of these technologies [1]. Whereas in back-office departments, natural language processing (NLP), biometrics, automated fingerprint analysis, Machine Learning for cybersecurity and fraud detection, and AI-powered real-time transaction analysis for risk monitoring are being utilized.
Focus areas for AI deployment in the banking and financial services sector
CIOs prefer using AI tech for deployment in four areas which are – customer service, operational models, performance monitoring and analytics, and risk mitigation.
For improved customer service, digitization of all repetitive processes such as payment platforms, customer inquiries, retail offerings, and investment offerings are now handled by Artificial Intelligence in banking and finance organizations. For operational purposes, the focus areas are – the replacement of physical branches with virtual branches that incorporate AI in mobile banking, chat modules, virtual 24/7 customer service centers, and automated email communications for smoother customer service [3].
In analytics and performance monitoring, Artificial Intelligence is used with the help of Natural Language Processing and Machine Learning to handle documents with unstructured data, predictions and forecasting of results and performance, generating insights, and data classification. Whereas for risk mitigation, AI and RPA are used to reduce human errors and improve process accuracy, and for improved fraud detection and cyber security purposes.
How can Simplifai’s AI solutions transform the BFSI sector?
Simplifai offers AI-powered digital solutions called Digital Employees that can be configured in the no-code Simplifai Studio platform that provides Intelligence Process Automation for all business needs. Digital Employees comprise individual products such as Emailbot, Documentbot, and Chatbot, together with the Rules Engine and Decision Engine. These solutions can offer high-grade automation to any organization in the banking and financial services sector. The solutions can streamline day-to-day business operations at the front office as well as back-office departments.
Powered by Natural Language Understanding (NLU), the Emailbot can read and interpret information from multiple email inquiries, classify them, identify the intention of the inquiries and take suitable actions with the help of the decision engine. With regards to the Documentbot, this product is powered by Natural Language Processing and Optical Character Recognition. It can process documents from email attachments, email uploads, and online folders, classify them, forward them to respective stakeholders and streamline overall document handling.
Inferring from what Simplifai products and solutions can do as mentioned above, they indeed are game-changing technology under Artificial Intelligence for Banking and Finance sector and its operations. Customer service, transactional processes, data archiving and classification, building customer profiles, and financial trading are some of the key areas where Simplifai’s AI products like Emailbot and Documentbot can be used extensively.
Sources
[1] Biswas, S. et.al., AI-bank of the future: Can banks meet the AI challenge? (2020, Sept 19). McKinsey & Company. https://www.mckinsey.com/industries/financial-services/our-insights/ai-bank-of-the-future-can-banks-meet-the-ai-challenge
[2] Harris-Ferante, K., D’Orazio, V., Financial Services CIOs Must Focus AI Investments on ‘Responsible AI’ in 2021 (2021, Jan 5). Gartner. https://www.gartner.com/document/3995169?ref=solrResearch&refval=316258068
[3] Purwar, N. Key Trends Shaping the Use of AI in Banking and Financial Services, (2021, Feb 10). UiPath. https://www.uipath.com/blog/industry-solutions/key-trends-ai-use-banking-financial-services
Written by,
Gaurav Athavale – Senior Content Writer at Simplifai
About Simplifai
Simplifai is an AI solutions company that provides end-to-end automation for businesses dealing with free text emails, documents, and chat communications.
Along with RPA, API, and advanced NLP technology. Simplifai offers AI modules and tailored Digital Employee solutions that work with any third-party system programmed to carry out specific tasks at the front- and back-end with high-grade automation.
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