Banks have long been on the cutting edge of technological advancements. From computers to the internet to mobile apps, few industries have benefited as much from new technology as the banking industry.
Artificial intelligence (AI) is no different. With the rise of AI, banks have a new tool to handle any number of tasks that are traditionally time-consuming, labor intensive, and prone to mistakes. There are several ways AI is doing this and will continue to do so in the years ahead.
JPMorgan Chase made headlines with its deployment of an AI bot whose function was quite different from those of other banks. Whereas many banks are using AI in the form of chatbots that interact with customers, JPMorgan Chase deployed a bot, known as COIN, that customers will never see—a bot that analyzes contracts, agreements, paperwork, and legal documents.
COIN is so successful that in the first 15 months of deployment, the AI saved the bank some 360,000 hours of manpower. COIN can do in seconds what takes human beings hours to accomplish. Just as important, COIN can analyze complex agreements, contracts, and legal documents more accurately than a person.
Anti-money laundering (AML) is another area where banks are beginning to tap into the power of AI. Detecting money laundering is a notoriously difficult task. With hundreds of thousands of wire transfers totaling trillions of dollars a day—not to mention the various privacy laws designed to protect financial customers—it’s almost impossible to identify every instance of money laundering. In spite of that, in the aftermath of 9/11, banks are required to do everything possible to identify and help combat money laundering.
While banks have been using rule-based software to identify money laundering for some time, AI offers a significant improvement. True AI learns, grows, and adapts with each experience, both successful and unsuccessful. As a result, while AI is already making a dent in AML, as time goes on, it will continue to rack up successes. Much of this is due to AI’s ability to process large quantities of data and see trends and patterns that can be easily missed when attempting to detect money laundering.
Closely related is the use of AI in fraud detection. Virtually every credit card and debit card user has been on the receiving end of having their suspended due to suspicious activity. Unfortunately, more often than not, there’s no actual fraudulent activity. Traveling, using a card at unfamiliar stores or purchasing products from some online stores can trigger a fraudulent warning.
Another area where AI is beginning to shines is improved customer experience. Thanks to machine learning, AI can identify patterns and data points that rudimentary, rule-based software can easily miss. Also, AI offers improved privacy and security—an essential factor when discussing financial transactions.
For centuries banks have responded to customer needs after being approached by a customer making a request. For the first time in history, banks can anticipate what customers want and need before being contacted, and instead approach the customer to meet those needs.
AI is making that possible for the first time in history. AI uses vast quantities of data; it has access to create predictive profiles of customers. Banks now can offer services to customers based on real-time data and insights. Instead of waiting for a customer to approach the bank with a request, virtual agents can analyze data and propose a service, or mix of services, tailored to the customer’s needs.
In time, it’s entirely likely that virtual agents will eventually begin replacing many traditional roles in the banking industry. AI offers the ability for banks to make data-based decisions faster, in real-time and proactively. As with any use of true AI, the more transactions a virtual agent engages in, the better, more efficient it will become.
AI is already revolutionizing the customer service process. It’s no secret that banks have different tiers of support. Unfortunately, like any business, banks have limited resources and cannot afford to provide everyone with that level of service—until now.
AI provides a viable way for all of a bank’s customers to receive top-notch service. Chatbots offer 24/7 help and support, mobile banking apps use predictive algorithms to show customers what they want to see preemptively and virtual loan officers and financial advisors can proactively make offers and provide financial advice—all based on data and machine learning AI. Meanwhile, on the back-end, AI can be double-checking and analyzing legal documents and contracts to ensure the customer, as well as the bank, are protected.
AI-Based Banking: The Future
The evidence is clear: The future of AI in banking in 2019 and beyond has never looked better. In fact, in an article for Global Banking & Finance Review, Five Degrees CEO Martijn Hohmann predicts that “through using cognitive computing systems, including real-time insights and information processing, banks can seize an opportunity that will grow revenues up to 30 percent by 2022.”
Whether it document processing, anti-money laundering, fraud detection, predictive banking, or customer service, AI offers a level of efficiency that is unparalleled in the history of banking. With access to virtually unlimited data, AI can see trends, patterns, outliers, and data points in a much larger context than the average human could easily discern. Best of all, with an increasing focus on privacy, AI represents a viable way to use that data in a safe, responsible manner.
Contact us to see how our AI platform can help your bank move forward in 2019 and beyond.