By Daniel Gutierrez
Did you know that artificial intelligence and machine learning could detect that it wasn’t really you who just swiped your card? That’s right, systems are being developed to flag transactions that seem fraudulent, so that banks can call up consumers and take control before the damage worsens. With everything from your refrigerator to your car going smart, banking and financial services cannot afford to lag. Before this decade ends, AI and big data will be making radical changes to the way banks serve their customers.
From creating better customer experiences and providing personalized financial advice, to automating process and administrative work as well as lower their own internal costs, banks can benefit greatly by leveraging AI and big data. Here are some of the most interesting ways AI and Big data will transform banking in 2019.
1. Preventing Overdraft Fees and Other Penalties
A lot of times, bank customers feel the need to create an automated savings plan, but are afraid to do so if an unexpected charge comes up and causes an overdraft. With smart AI, banks can mitigate such a circumstance. With steps like forward cash flow predictions, aggregated account data and data-driven intelligent awareness, banks can hold transfers to the automated savings account until there’s more money in the account, alert the customer of a possible overdraft and suggest a top up, and take other steps to prevent penalties.
Metro Bank is already doing that with Insights, an in-app money management tool that gives customers complete control of their finances. It alerts customers when there’s not enough money to cover a likely spend, recommends a top up before an automated payment is due, flags if a customer has accidentally been charged twice and alerts the customer when there has been any kind of unusual activity.
In an age where we expect the Domino’s app to remember our favorite pizza and Netflix to recommend the shows we like the most, surely the customers expect the banks to alert them of an unusual charge. Thankfully, AI, big data and business intelligence are quickly making that possible.
2. Providing Personalized Wealth Management Advice
J.D. Power’s 2018 Retail Banking Advice Study found that 78% of consumers want financial advice and guidance from their bank. However, only 28% of consumers actually felt that they receive advice.
The survey also found that the most common matters that customers seek advice on are retirement, investment, keeping track of expenses and saving opportunities. Once again, data and artificial intelligence is letting banks do this effectively. Check out how Wells Fargo is helping customers take control of their finances with everything from increased spending activity alerts to upcoming payments alerts. Royal Bank of Canada has won the Celent Model Bank 2018 award for personal financial experiences. Almost every other major bank is actively using Ai and big data to help customers track their expenses and receive personalized reports, as well as receive advice on how they can save more, pay due bills, avoid penalties and manage their personal finances better.
3. Detecting Fraud And Preventing Cybersecurity Risks
Fraud costs banks and customers billions of dollars each year. If AI and machine learning can crackdown on the fraud and cybersecurity issue in banking, both customers and banks alike stand to benefit from it. The technology has always been there, and is only getting smarter. Banks can develop programs that can use deep learning and machine learning to better identify what kind of a transaction is unusual of a customer. The trick lies in understanding more accurately and intuitively, so as to not inconvenience the customers by flagging too many charges that are actually not fraudulent.
The advances in machine learning and deep neural pathways open new frontiers in fighting online fraud and cybercrime. There are newer algorithms being developed that are based on the way people think. While it all sounds like science fiction, technology that can study a customer’s spending patterns and adjudge if the present transaction being carried out is legit or fraudulent, is already in its developing phase and will soon be a reality.
4. Personalizing Customer Experiences
When digital took over the world and the customer’s convenience became the first priority of all succeeding businesses, banks unfortunately, remained largely cold and distanced. The average customer still knows very little about the cryptic bank policies, terms and conditions, contingencies and everything else that goes on inside a bank.
AI and big data can change that. It can help banks create a much more customer friendly atmosphere and provide their customers a delightful digital banking experience. For instance, banks are now adopting technologies that analyze customer’s spending habits and draw insights into their banking behavior. This can help the banks provide customers personalized suggestions into all the saving opportunities they might have missed, loyalty points they might have not yet redeemed, better interest rate accounts they can move to and other ways to save money.
5. Improve Customer Service
Getting on the phone to resolve an issue with your bank can be a charade sometimes, and often, you still don’t get clear answers and then need to visit your bank in person. When it comes to providing customer service, banks could use AI to automate a number of tasks, create smarter self-service solutions, enable customers to resolve many of their issues on their own and when a bank personnel’s intervention is absolutely needed, data can enable the personnel to better help the customer. Needless to say, better AI powered customer service and self service solutions help banks keep costs down and save man hours.
It’s difficult to not be in awe of how intelligent algorithms can get and how much AI and big data can accomplish. Yet, with the speed at which everything we do is going digital, it’s only imperative that banks go hi-tech too, and use technologies like artificial intelligence, big data and predictive analysis to improve, enhance and secure banking.
To read more about big data we recommend you to read this: Turning Big Data into Business Insights