70% of financial firms are using machine learning to predict cash flow events, adjust credit scores and detect fraud according to Forbes. It is also predicted that artificial intelligence applications will save banks and financial institutions $447 billion by 2023.
Since the spread of AI in many other industries, the majority of banks (80%) have understood the potential benefits of AI in banking, and now it’s more important than ever with the widespread impact of COVID-19, which has affected the finance industry and pushed more people to embrace the digital experience. A question is raised here whether there is any need for going to a branch when customers can totally bank online. Let’s find out the answers in this article!
100% of banks now offer internet banking service using machine learning algorithms which allows customers to open an account, pay bills, transfer money, check balance, withdraw money or even deposit money on an online basis. This means that you can do all these activities wherever you are and at whatever time as long as you have an internet connection. This also means that there’s no driving to town, trying to find a parking space and waiting in a long queue, like there is with visiting a branch. Online banks even offer lower (or no) fees and higher interest rates than banks with stores as they don’t need to spend money on branch maintenance.
Enabling 24/7 customer interactions with chatbots
Chatbots are not brand new; not only banks but many other services have also been using them for a while. A chatbot, unlike an employee, is available 24/7, and customers have become increasingly comfortable using this software program to answer questions and handle many standard banking tasks that previously involved person-to-person interaction. The COVID-19 outbreak underscored their usefulness when people are not allowed to go out. TD Bank Group introduced an AI-powered chatbot called Clari which are able to give users calculated recommendations and help with other daily financial decisions. As a result, after one year, the TD Canadian mobile audience has increased by 70 percent and TD mobile app has consistently been ranked #1 in the finance category on both the Google and Apple App stores for 12 months.
Fraud detection, management and prevention
Have you ever received a phone call from your credit card company after you’ve made several purchases? The reason for that is AI fraud detection systems used by banks analyze your buying behavior and trigger an alert if something seems out of the ordinary or contradicts your traditional spending patterns.
JPMorgan Chase is one of the fastest banks that utilized this benefit of AI. The bank uses key fraud detecting applications, including implementing an algorithm to detect fraud patterns. Details of credit card transactions are sent to data centers, which decide whether the transactions are fraudulent.
Improved loan and credit decisioning
Banks are using AI-based systems to help make more informed, safer and profitable loan and credit decisions. Currently, many banks are still too confined to the use of credit scores, credit history, customer references and banking transactions to determine whether or not an individual or company is creditworthy. However, these credit reporting documents are far from perfect and are often riddled with errors, missing real-world transaction history and misclassifying creditors. In addition to using available data, AI-based loan decision systems and machine learning algorithms can look at behaviors and patterns to determine if a customer with limited credit history might in fact make a good credit customer or find customers whose patterns might increase the likelihood of default. More importantly, AI tools will totally eliminate discrimination in credit decisioning as they just assess ones’ creditworthiness based on real figures and data. For example, Brex, an American financial service, is using AI tools to evaluate customers’ banking transactions and then offer them credit cards.
Since artificial intelligence has become more widespread across all industries, it’s no surprise that it is taking off within the world of finance, especially since COVID-19 has changed human interaction. While some financial technologies (fintech) in the banking and finance sectors were already on the rise before the pandemic hit, the use of financial applications and mobile banking services increased by 72% as a result of the pandemic. In the future, with the support of AI, banks will be doing better and more effectively in providing and upgrading financial services while customers have better experience in terms of processing banking transactions.
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