Why Artificial Intelligence is an Opportunity for BFSI?
While the buzz around Artificial Intelligence (AI) may be at its peak now, AI as a concept is not a new one for the banking and financial sector. Making machines perform tasks more effortlessly and efficiently has been around for decades. What is happening now is nothing but pushing the boundaries of AI far ahead, to enhance customer service and personalization, identify patterns and trends, and answer banking queries real-time and more.
Let us go through a few broad implications on how AI is transforming the BFSI sector –
Making banking efficient and effective
AI coupled with automation has transformed banking services by leaps and bounds. Automation has made day-to-day banking more efficient and simpler. We don’t need a teller anymore to help us deposit money or cheques at a bank; we can sit in the comfort of our homes and apply for loans, buy insurance, transfer money online and more.
We are already interacting with chatbots, digital assistants and getting our day-to-day banking done online and finances related queries sorted efficiently. With the new dimensions of AI being infused in the BFSI sector, we will soon see it achieve a greater level of capabilities while simultaneously making banking processes less time consuming and simpler.
In a Digital Banking Report, The Power of Personalization in Banking, it was found that consumers want to share their personal information if they can receive custom advice, offers and service based on this shared insight. Personalized communications and advice as enabled by AI can be reflected by online advisors – that provide automated, algorithm-based portfolio management advice without the help of a human counterpart.
AI that enhances the customer experience significantly will be the primary use case for financial organizations to up their use of technology in the future.
Putting human talent to better use
One of the primary reasons why financial institutions are adopting AI in a big way is because it is helping them improve customer experiences. AI can take seemingly routine and repetitive processes and make them efficient and effective, without human effort.
For example: what used to be a very tedious process of new customer onboarding, communication can now become highly personalized interactions, based on individual activity after opening an account. This level of personalization was almost impossible to achieve in the past without the benefits of machine learning and AI.
While machine learning is making banking systems more intelligent – identifying patterns and connections that humans can’t – most machines will not replace a bank’s staff or personnel. Human interactions will be required for consumers who have more complex queries and requirements. In fact, bank employees view chatbots as a great help that allow employees to focus on closing more complex tasks and conversations, while bots perform the generic tasks faster.
Therefore, the key for financial institutions would be to use technology and human talent in a calculated way. While AI can complete compliance requirements, customer informational documentation, routine tasks and even product ‘frequently asked question’ responses – bank employees will have more time for strategic tasks that require empathy and intelligence.
The rise of new-age Fin-tech players
Fin-tech, of late is riding a huge growth wave using AI. We have already witnessed how post demonization in India, there has been a greater emphasis on digitization of all financial processes.
This has given a big push to a new breed of fin-tech players – the digital-wallet companies. Many players in the space have seized the opportunity and are growing at an exponential rate. The reason these players have witnessed tremendous success is because via their offerings, they are making an effort to simplify financial processes for consumers.
For example: mobile wallets have become hugely popular as they have made day-to-day transactions much easier for people.
A recent ASSOCHAM report says that the mobile-wallet market in India is expected to grow at over 190% to reach Rs 1,512 billion by financial year 2022 from the current level of about Rs.1.5 billion.
This clearly outlines the fact that people are willing to adopt new technologies that makes their finance related procedures hassle free.
The banking and financial services sector in India needs to embrace technological advancements like AI to plan for a rapidly changing future. AI will not only help them chalk out future-proof strategies but will also guide them on predicting and tackling challenges that will emerge on the way.
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