Banking has undergone a remarkable transformation, moving beyond the days of long, long queues and desktop-bound transactions. If you’ve been keeping tabs on the news, you’ve probably caught wind of the Gen AI or Generative Artificial Intelligence phenomenon. Gen AI is used in nearly every vertical of life these days, including education, amongst others!
In this blog, we’ll dive into the evolution of banking and how this technology can enhance the experience, offering convenience that adapts to your life.
Understanding Generative AI
“Generative Artificial Intelligence,” or Gen AI for the uninitiated, is defined by IBM as deep-learning models that can generate high-quality text, images, and other content based on the data they were trained on.
It’s a cutting-edge technology that enables machines to understand and develop human-like text. Unlike rule-based systems that rely on predefined responses, Gen AI chatbots use advanced algorithms and deep learning models to analyze and generate natural (almost human-like) language.
In the context of banking, leveraging Gen AI can offer personalized assistance, streamline transactions, provide real-time financial advice, and even enhance security measures. We’ll dive into more below.
How Can Gen AI Help in Banking?
As McKinsey puts it, there are, broadly, three categories of Gen AI adoption in banking. The three main areas are back-office operations, risk management, and customer-facing interactions.
Back office operations
Gen AI reshapes the landscape of back-office operations by tapping into the power of large language models. It seamlessly integrates automation into workflows, removing internal friction and reducing the reliance on outsourcing.
This integration can improve efficiency, allowing processes to take place with renewed speed and precision. The adoption of Gen AI in back-office operations translates into many benefits. Processes once slowed down with delays, can thus move forward with accelerated speed. The financial burden is alleviated as costs decrease, thanks to Gen AI-driven automation’s streamlined and cost-effective nature. Moreover, the accuracy improves too, ensuring that each operation is executed with the precision necessary in a vertical such as banking.
Gen AI has aided traditional models within the risk space. A few examples of these changes can be seen in underwriting (or risk analysis) models, collection processes, and monitoring systems. The result is a shift, where risk management moves past its traditional boundaries and is defined by efficiency and precision. It’s an automated process that helps banks understand risks better and decide faster if someone can get a loan.
Leveraging Gen AI as an assistant in customer-facing interactions, particularly for frontline relationship managers. Using client knowledge, this tech can give managers a more comprehensive understanding of a client, which facilitates more insightful and targeted discussions with them.
Gen AI doesn’t replace employees; it enhances their capabilities! The concept of employee empowerment takes center stage as Gen AI becomes the driving force behind improved service. Armed with the support of Gen AI, frontline relationship managers can now provide an elevated level of service without the need for employee replacement.
The benefits of generative AI to financial services institutions and banks are numerous, including in areas of fraud detection, better customer service, enhanced risk assessment, and more. In fraud detection and prevention, for example, AI offers a vast advantage as it can analyze large amounts of transactional data to detect any unusual patterns and identify possible fraud, greatly increasing a monitoring team’s efficiency and effectiveness, especially compared to the traditional ways of working.
In fact, this technology will also assist banks’ compliance teams with their anti-money laundering efforts, as well as reporting fraudulent scams and other suspicious activity more completely and more quickly.
Beyond these, Gen AI is also making the progress in areas such as new product development, customer operations, and marketing and sales.
Benefits of Gen AI Workflow Automation in Banking
Incorporating Gen AI in banking offers many benefits for users, fundamentally improving their financial interactions and experiences. Consider JPMorgan Chase, which has filed a patent application for a gen AI service to help investors select equities!
Some of the many advantages that Gen AI has on the banking sector include:
With Gen AI, you can always count on getting consistent and accurate responses, eliminating the anxiety of human errors and ensuring that you receive dependable support each time you reach out.
Gen AI could be leveraged as a digital assistant while banking, too. It’s at your service around the clock, ensuring that you can access your financial information or resolve queries whenever it’s most convenient for you, whether in the middle of the night or during a busy workday.
Gen AI chatbots excel at handling routine inquiries and transactions swiftly, reducing those dreaded wait times and processing delays, thereby transforming your banking experience into a fast and frictionless process.
Gen AI chatbots can understand individual preferences and behaviors, ensuring that every interaction feels tailored to your unique needs and financial goals, making banking feel more like a personalized concierge service.
Gen AI chatbots are fortified with robust security measures, ensuring that your sensitive information remains in safe hands, thus bolstering your confidence in the security of your financial interactions. To elucidate – Gen AI analyses how you typically use your accounts, the devices you access the app from, and your typical locations.
Now, let’s say the chatbot detects a potentially unusual transaction. Maybe it’s a large withdrawal from an unfamiliar location or deviates significantly from your usual spending habits. In a traditional banking scenario, you might not be alerted until much later, potentially after a breach has occurred. With Gen AI, the response is immediate. The chatbot recognizes the anomaly, swiftly alerts you to the suspicious transaction, and asks for your confirmation or denial. It can even guide you through steps to secure your account if needed, such as changing your password or implementing additional security measures.
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