Influence of Artificial Intelligence on the Banking and Financial Services sector: Key Insights
Artificial Intelligence in Banking and Financial services has become a driver for enhanced customer service, reduced operational costs, and increased operational efficiency. Businesses in the BFSI sector are optimistically inclined towards AI-powered process automation, front end support, to meet their business goals. According to McKinsey & Company, Artificial Intelligence potentially could unlock about USD 1 trillion in value generation in BFSI [1]
Being an early adopter of AI, the BFSI sector has now been using several individual technologies such as voice recognition, predictive analysis, and automated chat services. Disruptive AI technologies predicted enhancements to occur for rapid innovation, increased profits, better personalization, and provision of omnichannel business automation.
This blog elaborates on how Artificial Intelligence is influencing players in banking and financial services and provides insights about Simplifai’s AI-powered solutions and how they can be a cornerstone of AI adoption in the BFSI sector.
Artificial Intelligence in Banking and Finance: post-pandemic growth spurt
The use of Artificial Intelligence is not new in BFSI. In fact, as per the 2022 Gartner Data and Analytics for Digital Transformation Survey, a total of 67% of the respondents from banking are currently using AI [2].
However, before the Covid-19 pandemic, banks and other financial service organizations did face some obstacles while moving from traditional operating systems to AI-based business automation. Lack of a clear strategy, funding, inability of incumbent systems to scale up with new tech, and unstable regulatory mechanisms were prime hurdles for the same.
Contrary to expectations the post-pandemic times led to an enhanced growth rate of AI in the BFSI sector against these obstacles. For example, 35% of banks reported after the first pandemic wave that AI had a positive impact on technologies that support remote working. With work cultures shifting to remote and hybrid operations, many players in the industry have moved to AI and Machine Learning powered tools for automating daily processes. In fact, just during the initial stages of the Covid-19 pandemic, the use of mobile and online banking facilities increased by almost 50%, consequently leading to a rise in digital banking services [3].
These events set up the main drivers for Artificial Intelligence in BFSI, which are – preserving brand reputation, adhering to compliance requirements, and maintaining consumer trust. Whereas the use-cases of these drivers include process automation of operations, product pricing, customer self-service, and supporting complex decision-making strategies [3].
Key Artificial Intelligence Technologies in Banking and Finance
After proving that AI-based automation can handle several day-to-day tasks in BFSI at a scalable level, there are some business functions, where the technology is being used consistently in the sector. At the front office, automated document handling, automated email handling, and conversational bots for customer service are some of these technologies [1]. Whereas in back-office departments, natural language processing (NLP), AI-powered real-time debt collection analysis, and risk monitoring for insurance underwriting, are some of the business functions.
Focus areas for AI deployment in the banking and financial services sector
CIOs prefer using AI tech for deployment in four areas which are – customer service, operational models, performance monitoring and analytics, and risk mitigation.
For improved customer service, digitization of all repetitive processes such as payment platforms, customer inquiries, retail offerings, and investment offerings are now handled by AI tech in BFSI organizations. For operational purposes, the focus areas are – the replacement of physical branches with virtual branches that incorporate AI in mobile banking, chat modules, virtual 24/7 customer service centers, and automated email communications for smoother customer service [4].
In analytics and performance monitoring, Artificial Intelligence is used with the help of Natural Language Processing and Machine Learning to handle documents with unstructured data, predictions and forecasting of results and performance, generating insights, and data classification. Whereas for risk mitigation, AI and RPA are used to reduce human errors and improve process accuracy, and for enhanced customer service.
How can Simplifai’s AI solutions transform the BFSI sector?
Simplifai offers AI-powered digital solutions that can be configured in the no-code Simplifai Studio platform that provides Intelligence Process Automation for all business needs. Digital Employees comprise individual products such as Email Processing Solution, Document Processing Solution, and Chat Processing Solution, together with the Rules Engine and Decision Engine. These solutions can offer high-grade automation to any organization in the banking and financial services sector. The solutions can streamline day-to-day business operations at the front office as well as back-office departments.
Powered by Natural Language Understanding (NLU), the Email Processing Solution can read and interpret information from multiple email inquiries, classify them, identify the intention of the inquiries and take suitable actions with the help of the decision engine. With regards to the Document Processing Solution, this product is powered by Natural Language Processing and Optical Character Recognition. It can process documents from email attachments, email uploads, and online folders, classify them, forward them to respective stakeholders, and streamline overall document handling.
Inferring from what Simplifai products and solutions can do as mentioned above, they indeed are game-changing for the BFSI sector and its operations. Customer service, transactional processes, data archiving and classification, building customer profiles, and financial trading are some of the key areas where Simplifai’s AI products like Email Processing Solution and Document Processing Solution can be used extensively.
Sources
[1] Biswas, S. et.al., AI-bank of the future: Can banks meet the AI challenge? (2020, Sept 19). McKinsey & Company. https://www.mckinsey.com/industries/financial-services/our-insights/ai-bank-of-the-future-can-banks-meet-the-ai-challenge
[2] Sau, M. et. Al., Emerging Tech Impact Radar: Artificial Intelligence in Banking (2023, Jan 13) Gartner. https://www.gartner.com/document/4022945?ref=solrAll&refval=362862654
[3] Harris-Ferante, K., D’Orazio, V., Financial Services CIOs Must Focus AI Investments on ‘Responsible AI’ in 2021 (2021, Jan 5). Gartner.
https://www.gartner.com/document/3995169?ref=solrResearch&refval=316258068
[4] Purwar, N. Key Trends Shaping the Use of AI in Banking and Financial Services, (2021, Feb 10). UiPath. https://www.uipath.com/blog/industry-solutions/key-trends-ai-use-banking-financial-services
About Simplifai
Simplifai is an AI solutions company that provides end-to-end automation for businesses dealing with free text emails, documents, and chat communications.
Along with RPA, API, and advanced NLP technology. Simplifai offers AI modules and tailored AI solutions that work with any third-party system programmed to carry out specific tasks at the front- and back end with high-grade automation.
