The Financial Services industry demands adaptation. Generative artificial intelligence systems are revolutionizing traditional banking practices, giving early adopters a competitive advantage. As banks increasingly embrace this cutting-edge technology, the impacts on both staff and customers are profound. This blog delves into the transformative effects of generative AI on the banking industry and explores how it is reshaping roles, processes, and experiences.

How are Banks Utilizing AI?

Generative AI, short for Generative Artificial Intelligence, refers to a subset of artificial intelligence that focuses on creating new content, data, or information rather than simply analyzing or processing existing information. This type of AI is designed to generate novel and contextually relevant outputs, such as text, images, audio, or even entire scenarios.

The possibilities for automation and customer engagement are endless, with AI enhancing existing tech stacks across all verticals.

 

1. Streamlining Routine Tasks

Financial services employees possess specialized skillsets and industry knowledge required to navigate a complex environment. Unfortunately, they are often mired in time-consuming daily tasks. AI can reduce this burden with the automation of data entry, transaction processing, document verification, customer email responses with personalized messages, and more. Teams can shift time and energy towards more complex problems.

Despite making advances in digitization, many tasks in the banking industry are paperwork-heavy and require human scrutiny. These tasks are also the most susceptible to error and lead to operational cost and risk.

 

2. Enhanced Customer Experience

AI has the potential to improve customer experience at every touchpoint, along with adding touchpoints to collect advanced data. Chatbots in-app and on the website can field most customer problems. It has been estimated that up to 80% of all customer support interactions can be handled by chatbots.

Contact center agents are expected to possess a wide array of knowledge, including advanced specifics of products and services. Customers are often left on hold with long wait times, and must be transferred to different departments to get the information they require. By utilizing AI, agents can comb through a banks entire database in seconds- decades of information and customer interactions at their fingertips. This can greatly increase opportunities for upselling and improve CSAT scores.

 

3. Fraud Detection

This is one area where AI might always be superior to human analysis.

The unprecedented growth in digital transactions corresponds with rapid growth of money laundering, criminal financing, and payment fraud. PWC’s most recent Global Economic Survey found that, in the past two years, 56% of organizations surveyed had experienced fraud.

Successful money launderers are often as knowledgeable about banking systems as the employees who manage them. Constantly poking holes in the system, it’s impossible to keep up. Banks can utilize AI to autonomously update security measures based on financial crimes trends.

AI can analyze every step of a customer’s transaction history, creating a profile to predict fraud. A user who travels frequently will no longer have their card locked when they buy dinner in London on Tuesday and rent a hotel room in Dublin on Wednesday. Unless of course, someone tries to buy a TV in America at the same time.

 

With advanced fraud detection algorithms, AI systems can analyze transaction patterns, identify anomalies, and flag potentially fraudulent activities in real-time. This not only protects the customers but also safeguards the bank’s reputation, building trust in an era where cybersecurity is paramount.

 

4. Regulatory Compliance

Piggybacking off of the assistance in combating financial crimes, AI keeps a trail of breadcrumbs for any slip ups in the system. Mass amounts of data, when requested, can be pulled and sorted for regulatory bodies.

The price of regulatory slipups is simply too high to risk. Not only is AI tracking and building profiles on suspected cases of fraud, but the information is also being reported to audited and logged in regulatory and compliance databases. AI can enhance AML and KYC processes, improving the detection of suspicious activities and ensuring regulatory compliance.

Essentially, AI allows banks to create and assess trends that stay a step ahead of costly slip ups, rather than abiding only by pre-existing rules. AI allows the bank to constantly be proactive in their adaptation of new security measures, rather than being reactive.

 

5. Automated Investments

Why have a team spend hundreds of hours a week monitoring market trends when AI can do the same job in minutes, all day, every day? AI can scan markets for new opportunities and anomalies and plug this data back into a bank’s algorithmic trading system.

The aim would not be to replace traders and investors, but to aid the bank in performing huge numbers of small transactions daily, leaving their human experts to handle larger and more complex deals. Teams can also benefit from the advanced data insights provided.

Similar assistance can come in portfolio management. AI can optimize asset allocation based on risk tolerance, investment goals, and market conditions, ensuring a well-balanced portfolio.

 

6. Credit and Loan Assessments

Implement AI-driven credit scoring models that analyze a broader range of data points beyond traditional credit history. This includes transactional data, online behavior, and social media activity to provide a more comprehensive view of an applicant’s creditworthiness. After creating this customer profile, AI will utilize predicative analytics to determine the likelihood of defaults and repayments.

After loan approval AI will continue to monitor the financial health of the customer, upselling where possible, and alerting the bank of the potential need for intervention otherwise. This profile can be continually updated throughout the customer’s lifecycle, creating a persona to be reviewed when assessing similar applicants.

 

Summary

AI is revolutionizing how banks operate. Customer interactions are being transformed through AI-driven chatbots, providing instant support and personalized experiences. Moreover, AI’s ability to analyze vast amounts of data enables banks to make informed decisions, mitigate risks, and stay ahead of regulatory requirements. AI offers real-time market analysis and portfolio management, allowing banks to optimize asset allocation and enhance returns.

The integration of generative AI systems into banking practices offers a competitive edge. Driving innovation, improving efficiency, and delivering enhanced value to customers. As the industry continues to evolve, embracing AI technologies will be essential for banks to remain agile, resilient, and future-ready in a rapidly changing landscape.

 

Heitmeyer Keeps Banks on the Cutting Edge

Just as Artificial Intelligence continues to monitor our world and adapt to its changes, Heitmeyer is constantly combing through the workforce to find advanced professionals in the financial services space. We even use a few AI tools of our own to stay sharp.

For over 25 years Heitmeyer Consulting has focused exclusively on finding the best talent to advise and execute strategies for banks and insurance companies. Our network of 100,000 professionals (and growing) are thoroughly vetted and selected based on your specific project needs. This includes technology experts on the cups of developing new platforms in our industry.

Schedule time with our management team today to learn more about how we can assist in your growth.