Just like the digital transformations of our day to day lives retail banking domain has also changed drastically in recent years and to be honest this evolution is just speeding up each year. From personal interactions to smart banking solutions retail banking has come along way in recent years. Technology has completely transformed various aspects of retail banking like managing your account, keeping track of transaction, sensing your financial needs and coming up with new offers for them. Every account holder must stay updated with these services to take complete advantage of these technical advancements in retail banking.
The Traditional Banking Era
If you would have to create a picture of a bank in its working hours, how would you visualize it? The very first thing that will come to your mind would be people standing in long queues, then you would picturize separate counters for cash deposits, cash withdrawals and officials dedicated to process loan applications sitting at their desks and helping customers with the information regarding the same. Now this scenario has drastically change by the development of internet banking, mobile banking, artificial intelligence and machine learning. Now, we all have faced issues like long delays, less efficient service, very poor accessibility of the banks at least once a decade ago in our experience with banking services offered the banks.
The Dawn of Digital Banking
First transformation in the retail banking came around with the outburst in the web bubble when banks started online accounts in later half of 20th century. This one development in the technical domain enabled customers to gain insights about their accounts, process their payments, transfer their funds instantaneously from the convenience of their house. This advancement increased consumer experience, cost reduction, efficiency operational and customer reach outside their physical branch network.
The Rise of Mobile Banking
Mobile technology played crucial role and is taking retail banking to new heights in terms of personalized customer experience. This development made on the go banking services possible. Development of mobile applications enabled the customers to make transactions instantly, access information instantly regarding their account, get customized offers as per their financial history and most importantly having access anywhere and anytime.
The Digital Banking Revolution
Dynamically changing customer behaviour, accelerated technological advancements and heightened competition from emerging fintech businesses led to the birth of Digital Banks. These are the banks which can be considered as virtual version of the retail banks which provide complete banking services as provided by the retails but without the need for a physical bank location. These digital banks help banks to cut the cost of operations and provide 24/7 banking services throughout the year. Digital banks provided customized and uninterrupted banking services to the generation of the customers which is more tech savvy and require quick resolution of their banking issues.
The AI Uprising in retail Banking
Artificial Intelligence has transformed operations of every industry today and banking industry is not an exception in this transformation. It has enhanced customer experience, optimized operations and improved risk management drastically. Banking industry has been revolutionized by the intervention of artificial intelligence in major aspects of retail banking.
Enhanced Customer service
Banking services are all about the satisfaction of the customers as it is people’s money which is managed and trust of customers in the services provided a bank is the deciding factor in any bank’s success. AI empowered chat bots and virtual assistants are providing services beyond simply answering customer’s queries. These bots and assistants which are based on machine learning models can not only resolve issues and queries but can efficiently provide recommendations-based customer’s preferences and consumer behaviour patterns. On the server side these machine learning models can effectively anticipate customers needs, predict future financial needs based on data from various sources and customers credit history. New marketing campaigns can be accurately designed to reach out to cater modelled needs of customers.
Accelerated Operations
Fraud Detection and Prevention:
It is just amazing that how AI based models can detect patterns real time that indicate suspicious activities empowering banks to identify and prevent fraud, security threats and money laundering activities much more efficiently than traditional rule-based systems.
Credit Scoring and Underwriting:
When it comes to money decision making for lending is of prime importance for banks. The efficient and accurate models generated by using artificial intelligence can prove a game changer in calculating credit scores to assess credit worthiness of applicants. This accuracy helps in improving decision making for lending processes hence mitigating the risk for defaults and delinquencies.
Process Automation
Iterative banking tasks such as data entry, documents processing and account reconciliation can be automated easily by robotic process automation and integration of artificial intelligence can boost this automation in terms of speed and efficiency. This gives banks an edge in allocating human resources to more value addition activities and hence provides cost saving in operations.
Risk Management and Compliance:
Market Risk Analysis
With the exceptional ability to integrate data from various sources AI driven algorithms can analyse market data along with various present economic indicators to assess market conditions so that the new trends can be identified. The analysis of these trends can help banks in optimizing investment strategies which helps in reducing risks associated with investments.
Regulatory Compliance
Automated compliance monitoring and reporting ensures the compliance with the regulatory requirements for banks. It helps banks to stay compliant with the regulations like anti- money laundering, Know your customer, and data privacy. Being compliant reduces the risk of penalties which is indirect cost saving for the banks.
Cybersecurity
Customer data protection is the utmost priority for the financial institutions and AI powered cyber security solutions can prove excellent as these algorithms can detect and mitigate threats like malwares, phishing attacks, by analysing network traffic, user behaviour and system vulnerabilities in real time which enhances the resilience and integrity of banking systems and data.
Artificial Intelligence has proved nothing less than a boon for various sectors and banking sector is not an exception. Artificial Intelligence has not only increased efficiency and accuracy for the banks but has proved exceptionally beneficial for safeguarding customer data and mitigating financial frauds. It has been successfully able to transform the issue resolution aspect of the banking and financial services. We can hence say that AI revolution has bridged a substantial gap between the banks and their customers and has proved to be asset for the society as well.
