Artificial intelligence, or AI for short, is encountered in every aspect of our lives and the world we live in. Robots and machines are starting to perform certain tasks even better than us by deep-learning and mimicking human intelligence and actions.
This means that we are on the verge of a great wind of change in the entire economy and in all industries. Some sectors, which were the early birds of the digital transformation journey, seem to remain as the pioneers of the artificial intelligence evolution too.
So how will the banking industry and other financial institutions be affected by the upcoming AI models? Let’s go step by step and explore.
AI powered machines are becoming more skilled in many human jobs with each passing day. With natural language processing they can translate languages and provide seamless customer service. They can diagnose diseases and even perform surgeries to save human lives.
Many people are afraid that robots will take their jobs in this sense. Isn’t that the idea that science fiction scenarios have sown over the years? However, the benefits of AI are endless. So what many people, on the other hand, believe is that humans and machines will improve and strengthen each other.
The result of Harvard Business Review’s research with 1500 companies confirms that the highest productivity gains are experienced when people and machines work together. The research also shows that while 84% of respondents think they should use AI to achieve their business goals, only 16% have experience that goes beyond experimentation.
When we turn to the banking industry, it is more likely to talk about the benefits of AI in general. The role of AI in the banking industry is to enable banking services to run much more efficiently, securely and promptly, rather than taking jobs from people. The McKinsey report estimates that artificial intelligence can provide up to $1 trillion of additional value in global banking each year.
AI powered technologies should be seen as a tremendous resource for financial institutions in meeting ever-changing expectations with improved customer experiences. For this reason, it has become a priority for banks to adapt quickly to ‘Intelligent Banking’ in order to stay competitive.
Let’s go over a few AI technologies that are already making big changes in the banking industry:
Thanks to AI technologies, large amounts of data are processed rapidly. It also manages structured and unstructured data well beyond human skills. Through smart algorithms, past risk cases are analysed, and thus possible problems that can easily be encountered in the future are made predictable before they even occur.
On the other hand, artificial intelligence monitors the behavior, shopping habits or location of customers with their credit cards in real time and activates the security mechanism when there is an unusual transaction. Thus, it prevents possible fraud.
First of all, AI models are extremely objective, unlike humans. Lending digital banks and mobile apps can use the data provided by the users’ smartphones. This information is used not only to improve customer satisfaction by providing personalized options, but also to make a more accurate credit score assessment.
This is just the beginning, because AI powered credit scoring has the ability to easily analyze much more complex data.
Robotic process automation produces very important outputs to reduce operational costs. Using AI models to automate repetitive processes not only eliminates potential human errors but also helps to make workforce use much more efficient.
In order to trigger the next steps of the process, artificial intelligence retrieves and verifies necessary data, creates reports and forwards these outputs to the relevant units inside the bank.
Thus, process automation is one of the most critical issues in the transition to digital transformation and artificial intelligence technologies for financial institutions. Earnst & Young’s report predicts a cost savings of between 50% and 70% with robotic process automation methods.
According to Bloomberg reports, the search for employees with experience in data science, artificial intelligence or machine learning in banks and other financial institutions increased by 60% last year.
It is certain that the way of doing business will evolve with AI powered technologies, and the competition will also change form not only among financial institutions but also among employees.
AI-based technologies may seem transformational today. But in the near future, mastering artificial intelligence or related technologies will cease to be a distinctive skill and will become a basic expectation. This is because banks and financial institutions will have to act like technology companies, and they will need employees who have the skills to manage and even improve all processes.
Existing employees who want to stay competitive in the AI-dominated future of the finance industry will need to be involved in adaptation as soon as possible. At this point, domain expertise in finance will be their greatest advantage. On the other hand, new entrants to the industry will be expected to prove their technology knowledge and obtain industry dynamics as quickly as possible.
In short, those working in intelligent banking will need to be versatile, and having both technological and sectoral knowledge will prove them to be forerunners.
Financial institutions will be expected to show innovative and agile approaches in rapidly adapting to artificial intelligence technologies. Guiding existing employees with the right adaptation process to benefit from their industry knowhow and starting the transformation from the inside will be the most accurate way to proceed in robotic processes that will always need a human touch.
On the other hand, finding the best partner that can provide a seamless transformation process is also vital. With 30+ years of finance industry knowhow and our dedicated team of experts, we help institutions to step up to smart finance. We do our best to add value to financial institutions by empowering them with our next-generation solutions that drive functional excellence.