Recently, artificial intelligence has been playing a large role in shaping different industries like in the education sector with AI teacher’s assistants and in the healthcare industry with analysing clinical notes and research and choosing the best evidence-based treatment plan for patients.
With AI having a positive reputation for minimizing human risk and error, it is becoming more common for the banking industry to implement this technology into mobile apps. According to the McKinsey Global Institute, there are five categories of AI including computer vision, natural language, virtual assistants, robotic process automation, and advanced machine learning. They are predicting that by 2030, 70% of companies might have adopted at least one of these types of artificial intelligence.
This post looks at how artificial intelligence is having an effect on the banking industry, but more specifically, how mobile apps are shaping the way banking systems are managed including AI personalization, enhanced customer experiences with chatbots and heightened security and fraud prevention methods.
Don’t forget to check out a recent post where we discussed the different elements of artificial intelligence, its benefits and challenges and a description of some of the industries utilizing the technology.
How does Artificial Intelligence Have an Effect on Banking?
The big question here is how does artificial intelligence affect the banking industry the most? The answer is simple: mobile apps. The emergence of mobile banking is changing the way we handle our finances. Now with the added benefit of artificial intelligence and with a little help from automation, it completely personalizes the mobile banking experience. For example, RBC clients can enable Siri in the RBC mobile banking app to transfer money to anyone in their recipient list.
AI technology and automation can handle tasks like remind clients of their current balance and upcoming bill payments and expenses, make automated transactions in accordance to when bills are due, send helpful reminders, improve financial health and encourage positive spending and saving habits. Artificial intelligence and mobile banking offer a new level of personalization, enhanced customer experience and security that is much different than traditional banking methods.
Personalization and Enhanced Customer Experience
An enhanced customer experience comes from the use of machine learning and analysing customer behaviour, goals and habits so banks can better personalize and improve financial products, services, support and interactions. This technology can better help clients with financial decisions, investment strategies based on their insurance, liabilities and earnings, send notifications about the latest financial products and services based on their in-app behaviour and purchase history, and it acts as a guide to help customers navigate the app.
Most mobile banking platforms are accompanied by chatbots, which are automated service assistants using AI technology to enhance customer service through conversational interfaces. They can detect emotion and context to help answer common questions through online messaging instead of calling a customer service representative or physically visiting a branch. They can quickly process and resolve customer queries and complaints through a lifelike conversation and identify the customer’s issues and provide them with the appropriate responses and solutions.
This personalized communication with clients can assist with wealth management services, loan underwriting, quicker and more efficient transactions, provide custom advice, services and offers, manage customer data and analytics and advise clients on the correct credit and savings financial products.
North American Banks Using Chatbots in Mobile Apps
The Bank of America recently released its virtual assistant Erica to its 25 million mobile banking customers. Erica can use voice commands and texts, customers can ask for account balances, transfer money between accounts, lock and unlock their debit cards, find past transactions, send money to friends and schedule meetings with bank representatives at their local branch.
In another example, Finn AI is a Canadian company offering their chatbot to financial institutions. This virtual banking assistant uses natural language and machine learning to create user insights and analyse user profiles so customers receive personalized advice. In fact, the Bank of Montreal is in partnership with Finn AI and created a personal banking chatbot called BMO Bolt. Already, it can answer 250 common questions and as interactions with the chatbot increase, it will learn to be more helpful to clients.
Heightened Security and Fraud Prevention
According to Mcafee, cybercrime targets primarily banks and roughly costs the global economy $600 billion. With that in mind, artificial intelligence is being used to refine the ways of confirming one’s identity to heighten the protection and security of one’s financials and privacy. Using augmented passwords and biometric identification such as voice and facial recognition and fingerprints will become the norm of client verification.
By 2021, 1.9 billion bank customers will be using some form of biometric identification. For example, RBC uses voice recognition and natural conversation for over-the-phone secure client identity verification. There is no longer the need for pins and passwords or answering the standard authentication questions. Even more recent iPhones like the iPhone X are using biometric identification with facial recognition to unlock the phone and validate Apple Pay purchases.
AI and machine learning are also helping to avoid money laundering by analysing customer transactional data and offer faster reaction times to stop future fraud attempts. This technology can detect fraud in real-time and predict how the fraudulent behaviour will progress so the bank can stop it and find the person responsible. An example of detecting the fraudulent transactions and other suspicious activity could look like a massive transaction from an account that has a history of only making small purchases. Artificial intelligence can then immediately put on hold the large transaction until it is confirmed by the actual account holder.
Along with the banking sector, artificial intelligence is clearly making an impact on different industries. It will be interesting to see how far the banking industry will evolve with AI and how it will continue to enhance customer service and experience through the convenience of mobile apps. Be sure to keep reading our blog posts as we will dive deeper into the FinTech industry along with how it is evolving with other different features, trends and technology.