Artificial intelligence is set to change the future of almost every industry. It augments the decision-making processes, facilitates error-free back-end processes, enables fraud identification, empowers with an efficient marketing tool, increases turn-around time, and improves customer services.

Historically, banking, finance, and insurance companies have been leaders in adopting technological advancements, and AI is no exception to that. Financial Institutions (FIs) produce vast amounts of data every day in the form of images, videos, audio, texts, documents, etc. This creates a tremendous opportunity for AI technologies to generate significant value across several aspects of financial services, thereby transforming the customer experience. Additionally, the importance of historical data cannot be undermined in the AI modeling process. For banks, the historical data gives insights to the AI model for recommendations on the best-suited customers in terms of risk, profitability, and customer lifetime value.

How is AI making an impact across a multitude of processes in financial institutions?

• Classifying Digital Documents

Per Deloitte, “many organizations are devoting more financial and human resources to deploy intelligent document processing capabilities. Success by forward-looking organizations is driving confidence in a market expected to grow 70-80% over the next two years to US$1.1 billion.” 

FIs predominantly depend on paperwork for their various operations, like account opening, customer onboarding, lending, trade finance, and claim processing. Once the structured and unstructured documents are digitized, AI-enabled OCR can speed up the process of data extraction, classification, and verification, with automation leading the way to touchless customer onboarding.

• Augmenting Decision-making Process

Predictive analytics based on information influx augments the decision-making process for various scenarios, such as eligibility calculation for lending or policy issuance. It evaluates all new applications, identifies the tagged data, does real-time validation with third-party systems, and forwards them to straight-through-processing if all required criteria are met. Failures are sent for review.

• Improving Risk Accuracy

Per Deloitte, “40% of the health insurance customers, 38% of home insurance customers, and 48% of motor insurance customers are willing to track their behavior and share this data with insurers for a more accurate premium.” An AI-enabled underwriting engine analyzes existing historical databases, scans through customers’ current policy data, tracks customers’ behavior, determines the risk, and decides the accurate premium. FIs can effectively leverage AI to evaluate first-time applicants with no credit score by calculating their creditworthiness based on online transactions.

• Detecting Digital Frauds

Per CNBC report, “digital fraud attacks against financial services companies increased 109% in the U.S during the first four months of 2021.”

Fraudsters target online transactions frequently. Machine Learning (ML) and AI tools can prevent this in claims, AML, BSA, KYC frauds by analyzing transactions, determining trends, detecting frauds in real-time, rejecting duplicate applications, and rejecting fraud applicants. The digital footprint and browsing pattern 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 typography discrepancies.

•  Delivering Hyper-personalized Products and Services

AI solutions can analyze the browsing patterns to decide the visitor’s purpose. This enables financial institutions to improve a visitor’s propensity to become a customer by sending personalized offers, increasing the conversion rate. Current customers’ transaction details, real-time location, and even social groups can be used as input to send personalized and contextual offers.

Insurance carriers can similarly leverage machine learning and mathematical models to analyze customer data such as exercise, nutrition, working patterns, and medicinal usage, to provide customized life, health, and specialized insurance policies.

• Reducing Manual Intervention

A McKinsey survey of U.S retail banking customers found that at the banks with the highest degree of reported customer satisfaction, deposits grew 84 percent faster than at the banks with the lowest satisfaction ratings.

AI-enabled tools like chatbots and voice-AI can significantly improve customer care services with 24X7 availability, no waiting time, and a better customer experience. Voice AI can stimulate a conversation in natural language, and chatbots can use customer data based on account information, social media interaction, and past customer interactions to deliver contextual responses. Human agents can utilize their time in more value-added services.

The Final Word!

According to The Economist Intelligence Unit, “banks and insurance companies expect an 86% increase in AI-related investments into technology by 2025”.

It frees employees from mundane and repeatable tasks, facilitates better decision-making, infuses intelligence across processes, and helps financial institutions deliver exceptional customer experience.

Now is the time for financial institutions to be ready for this AI revolution!