Imagine a banking experience where your bank’s financial products and services are all specifically catered to your unique needs, tailored to your personal requirements and credit capacity. Or if you are an employee at a bank, picture being able to understand consumer risks and needs precisely, because the bank’s AI system has already predicted it. Not only would this make your job easier, but you can better protect everyday people against transaction fraud.
In this article, Mohan Jayaraman, Managing Director for Southeast Asia and Regional Innovation, Experian, shares why AI-Enabled banking is the key to post-pandemic success.
With the COVID-19 pandemic accelerating digitalisation in banks, the scenarios mentioned are not science fiction. From AI-powered Know Your Customer (KYC) processes that prevent fraud, to predictions on changing consumer needs and data-powered consumer decisions – these are the current forward steps being taken in the so-called ‘new normal’.
Optimising AI technology is a necessity for banks to remain relevant in a swiftly changing landscape. And we know that banks are recognising the importance of this AI-first approach – in fact, 59% of businesses globally have already begun investing in advanced analytics and AI, as well as fraud detection methods or software, according to our recent Experian Global Insights Report. Our report also shows that AI can help businesses stay ahead of the curve – 40% say they’re able to better convey data to enhance the customer experience, protect consumer information, and personalise products and services. Thanks to its learning capabilities, AI can ensure banks are able to adapt alongside consumers and industry trends in real-time. Instead of a one-size-fits-all approach, this provides a safer, curated and user-friendly experience that is unique to each individual customer.
And for traditional financial institutions facing fierce competition from digital banks, you’ve got to be able to differentiate yourself with that level of intuition that AI can bring to the table.
Using AI to cater to shifting customer expectations
Remember when we had to set hours aside in a day to take a trip to the bank? Obviously, things have changed now in most markets – especially since COVID-19 altered the way banks do business, as customer expectations shifted almost overnight. Adapting quickly is possible, and it’s necessary today to remain competitive.
Customers now look at speed, personalisation, and a pertinent selection of products to define the new banking experience. In fact, consumers in the four countries surveyed by Experian expect immediate results – only 29% of customers are willing to wait up to 30 seconds to access their bank accounts online, before abandoning the transaction. That’s nearly two-thirds of the population who simply won’t wait. This adds to the list of problems to be solved in the digitisation journey. Additionally, governments around the world, especially in developing nations, are working to harness the power of data to benefit consumers.
AI’s capability to trawl through huge amounts of data and retrieve accurate insights for customers within a short period of time is vital to address this need. Our report found that 3 of the top 5 solutions businesses use to help improve the customer journey are designed for driving insights into faster customer decisions, including on-demand cloud-based decision apps. This improves basic processes, such as signing up for a new bank account as well as more complicated processes like loan applications.
With time and accuracy on our side, we can wave goodbye to tediously long waits to reach counter staff and the tiresome process of filling in lengthy application forms. It also reduces human error and mundane tasks, enabling employees to take on higher-value tasks in providing better services for customers.
Supporting underserved segments in time of need
If we need a loan, we are in a position where we know exactly where to go and who to get in contact with. Access to banking options are right at our fingertips, and we know instinctively which buttons to press to find it. But this is not the case for everyone. Around the world, several underbanked communities exist, who have little access to financial services and solutions. In fact, in Southeast Asia alone, the underbanked population is estimated at 290 million people. Without sufficient credit bureau data to determine their creditworthiness, many of these communities struggle to secure access to loans.
This is where I truly love AI and its ability to use data for good. Utilising AI to reach and support underserved segments of society – whether they simply have never had access, or have found themselves disproportionately impacted by the pandemic – is a huge opportunity for banks. It empowers underbanked communities with access to crucial credit and formal financial services, helping businesses continue to operate and survive.
An example of this is our recent partnership with Standard Chartered Bank, to leverage state-of-the-art machine learning capabilities and improving credit decisioning by effectively ingesting and analysing a high volume of alternative data. This means Standard Chartered is now able to improve credit decisioning and risk management for clients who previously would have been underbanked.
These are just a couple of examples of how AI can benefit banks and communities in a post-pandemic world. The bank of the future will have to meet customers’ rising expectations in an AI-powered world, where it can anticipate and recommend actions, automate key tasks and personalise details that show an understanding of each individual customer’s needs. AI will also ensure banks have the speed to keep up in a digital world, to innovate and to launch new products or services swiftly.
As we traverse a new world and economy impacted by the pandemic, it’s clear that an AI-first approach is the optimal way to ensure banks are ready to tackle any challenges that lie ahead.