• Annalize Seebacher
  • No Comments
Artificial Intelligence in Retail Banking

Artificial Intelligence: The Rising Star in Retail Banking.

Empowered employees and delighted customers play a crucial rule in an organization’s success, of course regardless of industry type. Another accepted fact is that empowered employees translate into happier customers. This simply means that in the era of digital, enterprises need to be proactive and create a work environment that helps employees move beyond template-based work and focus on more constructive tasks. This is where Artificial Intelligence (AI) comes into a picture.

The retail banking industry has, in general, stayed ahead of the technological curve, indicating business leaders are no stranger to the cutting-edge technologies. Artificial intelligence (AI) technology has made appearances across banking operations in small capacities, but its true value lies in using data to transforming customer experience, ensuring security & compliance, maximizing efficiencies, and driving revenue.

The Role of AI

Whenever we think about AI, we visualize those smart assistants, like Amazon’s Alexa or Apple’s Siri. While these are truly extraordinary examples, the potential of AI extends further, especially in the context of retail banking. AI becomes an intelligent extension to technologies, by adding context to automated processes, enabling personalization, and optimizing back-end processes.

Setting the Stage

Too often, financial institutions face the challenge of siloed operations with little-to-no cross-functional or departmental communication. For AI to be effective, in the context of retail banking and beyond, it is important that an enterprise is connected. How? With a unified platform!

An unified platform bridges operational silos and relies on the total connectivity and centralization of an enterprise. To help deliver significant results, AI-enabled systems pull critical business information and customers’ data. Its novelty lies in the capacity to access thousands of data points from disparate sources & channels and use that information to create an intuitive and predictive image of customers and their needs. Further, from a security perspective, the AI-powered systems help estimate how likely it is that a customer may or may not be able to make the repayment obligations, along with certain credit checks to remove duplication and identify possible defaulters based on smart rules – facilitating a significant reduction in non-performing assets. In addition to these, the AI-enabled systems make it an effortless task to measure customer lifetime value, which poses challenges if it’s not measured the right way. Yet again, thanks to smart rules, functional in the backend.

The Future of AI in Retail Banking

Within the retail banking sector specifically, AI has several potential implications, ranging from enabling enhancing customer experiences to improving companies’ overall bottom line. For the financial institutions in the coming decade, AI is projected to be the key to staying relevant and competitive. Also, AI is predicted to power 95% of customer interactions by the year 20251. Stated below are some of the major ways in which AI can transform the retail banking industry:

Superior customer experience: AI enables business leaders to aggregate customers’ data and build their unique profiles. The built profiles are leveraged to personalize customers’ experiences—by creating targeted marketing campaigns and rolling out personalized communications. This insight into customers’ needs as well as preferences enables business users to cross sell and upsell their products, thereby driving revenue.

Impactful marketing: In this hyper-connected world, one of the key enablers to make a mark amongst customers is by reaching out to them at the right time, in the right way, via the right medium. In the context of the retail banking industry, AI coupled with analytics and machine learning (ML) capabilities, not only aggregate a customer’s data from various channels and financial transactions, it can help analyze the data and make informed business decisions. Further, this composite sketch of a customer’s data can be leveraged to create an intuitive, targeted, and holistic marketing plan, tailored to the individual(s). This intentional and thoughtful approach to marketing ensures that customers are reached out with necessary and relevant marketing offerings. Most importantly, this comprehensive picture of the customer helps optimize the lifetime value of each customer.

Customer Loyalty: With AI-enabled systems, it’s easy to track the evolving needs of a single customer throughout his/her journey, from initial account opening/transaction to suggesting various plans for housing loans, to retirement planning, and more. This attention to customer patterns and commitment to personalized customer engagement across the customer lifetime is one of the most effective ways to secure continued loyalty and revenue from each customer.

Employee empowerment: One of AI’s most well-known functions is in adding context and human touch to the automated processes. Not only can AI take over basic help desk and customer service functions, but it can also re-route more complicated issues to human representatives, providing knowledge workers relevant customer information, transcripts, and documents related to the issue. This frees up employees to perform constructive tasks and handle exceptional cases in a convenient way.

Better compliance and security: With the need to adhere to ever-changing regulatory mandates, retail banks must stay up to par. AI enables financial institutions to do just that—enabling end-to-end flexibility based upon intuitive, data-based analytics, all packaged and ready for quick deployment. AI-enabled systems enable financial organizations to identify and stop security breaches. Especially in the context of retail accounts, financial organizations can utilize AI-enabled processes to create data-based profiles, complete with a set of “normal” behavioral patterns. In case of any suspected security breaches, such as fraud or money laundering, organizations can implement an AI-powered anomaly detection tool to flag any customer behavior that conflicts with established patterns. This type of early recognition protects both the customer’s information and assets, as well as the reliability and reputation of the financial institution.

In conclusion

Organizations, regardless of the industry type, aim to have empowered employees and happily engaged customers. And, in various ways, AI-powered systems enable financial institutions to cut costs, increase efficiency, security, and compliance, and diversify their revenue streams—by targeting customers individually with personalized customer experiences and communications, and by widening the customer pool altogether. AI brings retail banking into the digital age in full force. There is no real limit to the ways in which AI can be creatively wielded to transform retail banking.