Looking Beyond Customer Service in Your AI Approach

Artificial intelligence continues to make headlines because its impact is real and can be significant. In its recent global survey on AI in financial services, EY found that senior executives believe AI will be an essential business driver across the industry. And 77% of respondents anticipate AI will possess high or very high overall importance to their businesses in the next two years.

Customer experience is often the most visible application of AI – and it’s where many organizations focus their effort. But AI in banking applications isn’t just limited to retail banking services. The back and middle offices of investment banking and other financial services also can benefit from AI.

Why customer experience has been the focus

Mobile and online banking had been on the incline before the pandemic hit, and it has skyrocketed since as people maintain social distancing and avoid exposure to the virus by limiting contact with others and public places. In fact, new mobile banking registrations jumped by 200% in April alone, according to Fidelity National Information Services. This move away from traditional bank tellers and brick-and-mortar locations shows no signs of stopping.

Accordingly, banks are deploying AI into the customer experience. AI increases convenience via chatbots and digital assistants, for instance. Another example is Satander Bank’s use of AI for voice recognition, so mobile users can dictate questions through an app, similar to Apple’s Siri. AI is also being used by banks for biometric authentication, authorizations and other processes. Banks also are gathering the many data points for its customers and using AI to create more personalised customer interactions. This creates the kind of differentiation that retains current customers and draws new ones in.

Going beyond customer service to operations 

Of course, it’s important to offer convenience to customers and truly serve them to retain as many as possible in the competitive financial services sector. That’s why AI is usually deployed first in the customer experience realm and is the place that many financial organizations focus their AI efforts. However, in doing so, they should not ignore internal operations and their own employees.

There is a tremendous amount of potential in AI for the behind-the-scenes work of FSI. It can increase the efficiency of processes and operations, such as reducing the time it takes to fulfill service requests or removing repetitive manual processes from the to-do list of human employees.

As banks work to digitize their legacy systems, the stability and resilience of their IT backbone is essential. It helps them free up resources from constant firefighting and focus instead on optimizing systems and making them ready for growth. AI and automation can enable this.

With the use of these tools, banks are also seeing benefits such as reduction in critical issues with internet and mobile banking issues, decrease in service-level agreement violations that can lead to financial penalties and improved accuracy in predicting future risks.

Risk management and fraud

It’s not small thing to manage risk and compliance while making sure the front and back office are running efficiently and that customers are getting a great experience. Risk management is a major use case for AI in financial services. The aforementioned EY study found that the most prevalent use case is fraud/anomaly detection and surveillance, used by 75% of all adopters of AI in risk management.

This is a key area for financial services, given that it’s such a highly regulated industry with access to a significant amount of sensitive data. The European regulatory and supervisory framework for financial institutions, in particular, is among the most stringent in the world. These regulations have been instrumental in incentivizing European banks to clean up their balance sheets, increase their capital levels and improve their risk management practices.

Fortunately, there are a variety of AI-based tools on the market today that can conduct checks and perform fraud detection. The tools can detect and flag connections between certain entities that would most likely go unnoticed if the financial institution relied only on humans to do these checks.

Dream big with AI

Leaders at financial institutions understand that AI has a significant role to play in their digital transformation efforts. Because customer experience is vital to success, banks have typically focused their AI initiatives on customer-facing services. However, the sector must take a larger view and use AI to further digital transformation goals beyond customer service. Improving operations in the back and middle offices can ultimately improve a financial organization’s ability to deliver excellent customer experience – in addition to improving regulatory compliance. Even employee satisfaction improves when redundant tasks become automated. And improvements in security are also possible when AI and automation are applied.

It’s easy to fall into the trap of implementing AI simply because it’s the hot new technology. But getting started with AI requires first defining the problem that needs to be solved. What does the organization need most: more efficient processes? Stronger compliance? Better fraud detection? Choose one use case and test it. As it demonstrates success, determine how to scale it up. AI absolutely can improve the customer experience, but it can do by transforming the entire organization’s digital landscape.