Artificial intelligence is poised to change the future of almost every industry. It augments decision-making processes, facilitates error-free back-end processes, enables fraud identification, offers an effective marketing tool, increases turnaround times, and improves customer services.
Historically, banking, finance, and insurance companies have been leaders in adopting technological advancements, and AI is no exception. Financial institutions (FIs) produce vast amounts of data every day in the form of images, videos, audio, text, documents, etc. This creates a tremendous opportunity for AI technologies to drive significant value across multiple aspects of financial services, transforming the customer experience. Additionally, the importance of historical data cannot be underestimated in the AI modeling process. For banks, historical data provides insight into the AI model for recommendations on best-fit customers in terms of risk, profitability and customer lifetime value.
How is AI impacting a multitude of processes in financial institutions?
- Classify digital documents
By Deloitte, “many organizations are devoting more financial and human resources to deploying intelligent document processing capabilities. The success of forward-looking organizations builds confidence in a market that is expected to grow 70-80% over the next two years to reach US$1.1 billion.
FIs mainly depend on paperwork for their various operations, such as account opening, customer onboarding, lending, trade finance and claims handling. Once structured and unstructured documents are scanned, AI-enabled OCR can speed up the process of extracting, classifying, and verifying data, with automation paving the way for contactless customer onboarding.
- Improve the decision-making process
Predictive analytics based on the influx of information augments the decision-making process for various scenarios, such as calculating eligibility for loans or issuing policies. It evaluates all new applications, identifies tagged data, performs real-time validation with third-party systems, and passes it to straight-through processing if all required criteria are met. Failures are sent for review.
By Deloitte“40% of health insurance customers, 38% of home insurance customers, and 48% of auto insurance customers are willing to track their behavior and share that data with insurers for a more accurate premium. ”
An AI-enabled underwriting engine scans existing historical databases, analyzes current client policy data, tracks client behavior, determines risk and decides the exact premium. FIs can effectively leverage AI to assess new applicants without a credit score by calculating their creditworthiness based on online transactions.
By CNBC Report“Digital fraud attacks against financial services companies increased 109% in the United States in the first four months of 2021.”
Fraudsters frequently target online transactions. Machine learning (ML) and AI tools can prevent this in claims, AML, BSA, KYC fraud by analyzing transactions, determining trends, detecting fraud in real time, rejecting claims in double and rejecting candidates for fraud. The digital fingerprint and browsing mode of devices such as cell phones can also identify fraudulent applications. Using a combination of OCR and AI, fraudulent documents can be identified by detecting typographical discrepancies.
- Offer hyper-personalized products and services
AI solutions can analyze browsing patterns to decide the visitor’s purpose. This allows financial institutions to improve a visitor’s propensity to become a customer by sending personalized offers, thereby increasing the conversion rate. Current customer transaction details, real-time location, and even social groups can be used as input data to send personalized and contextual offers.
Insurance companies can also leverage machine learning and mathematical models to analyze customer data such as exercise, nutrition, work habits, and medication use to provide insurance policies. personalized life, health and specialty insurance.
- Reduce manual interventions
A McKinsey US Retail Banking Survey customers found that at banks with the highest customer satisfaction ratings, deposits grew 84% faster than at banks with the lowest satisfaction ratings.
AI-enabled tools such as chatbots and voice AI can dramatically improve customer support services with 24/7 availability, no wait times and better customer experience . Voice AI can stimulate natural language conversation, and chatbots can use customer data based on account information, social media interaction, and past customer interactions to provide contextual responses. Human agents can use their time in higher value-added services.
The last word!
According to The Economist’s Intelligence Unit“Banks and insurance companies expect an 86% increase in AI-related investment in technology by 2025.”
It frees employees from mundane and repeatable tasks, facilitates better decision-making, infuses intelligence into processes, and helps financial institutions deliver an exceptional customer experience.
Now is the time for financial institutions to be ready for this AI revolution!