Artificial intelligence stands poised to change numerous industries with the way it handles data, but the banking sector might see the most transformative outcomes. Only one-third of financial institutions are using AI technologies, such as predictive analytics and voice recognition, which means several opportunities exist to improve processes.
Most banks and credit unions believe that they will use artificial intelligence for customer interactions as this technology develops. That’s only one change of many that are coming to the industry in the next few years.
3 Critical Ways the AI Will Transform Banking
The most significant impact that artificial intelligence may bring to the banking sector is how it will transform the role of workers. Automated tellers and chatbots can help to process loans, open accounts, or answer questions at a lower cost than human employees. This benefit could cause a job reduction of up to 30% by 2030, but improve services and lower costs for each institution.
Several other changes in the banking sector are coming because of AI.
1. AI will get rid of the legacy systems in the banking industry.
IT costs might be a significant pain point for the banking industry, but this issue is due to the legacy systems that the institutions maintain. Up to 70% of the industry’s information technology expenses each year go to the upkeep of out-of-date systems. AI might represent a significant investment for some providers, but it will also help to reduce costs in numerous ways.
Robotics process automation can help to support several departments in a bank with potentially one installation. This one action could reduce IT expenditures by up to 80%, making AI a worthwhile investment.
2. AI will enhance customer experiences.
According to Deltec Bank, “Digital assistants in the banking industry can help customers make better financial decisions.” AI uses a combination of predictive analytics and cognitive messaging to create consumer benefits by suggesting custom goals for each person. It can determine saving and spending habits, open new accounts, and answer questions immediately.
Modern technology allows a chatbot to recognize emotions to generate a preferred response. Although the accuracy rate is still not perfect, the 24/7 benefits of having AI available to meet a customer’s financial needs is a transformative event for the banking industry.
3. AI improves the user interface for customers.
Artificial intelligence helps the banking industry by offering a simplified user interface. When customers can reach the pages or products they need quickly, then the structure is more likely to generate a positive response. This change can happen on mobile banking apps, websites, and in-person screens.
Responsive design improvements allow the content to adapt to the customer. Advanced machine learning can help people to simplify the process of document transference, mortgage applications, and account interactions by using data to understand what the intended need is with each interaction.
Artificial Intelligence Could Change Everything
The rapid development of artificial intelligence could have a significant impact on the banking sector. AI will change how customers interact with each institution. Without an investment in this area, it may be a challenge for banks and credit unions to stay competitive.
The institutions that will see the most success are already preparing for the future. These banks are preparing their staff today by providing them with career training for tomorrow’s opportunities.
A transition is coming. It is not a matter of “if,” but of “when.”
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management