Could AI-Powered Customer Service Be the Future of Banking?
Artificial intelligence is no longer just the domain of science fiction movies - and it's much more than a nifty way to play chess by yourself and still enjoy a challenge. Today, some of the most common applications of AI are found in the business world, where the technology is used for everything from predictive modeling to personalizing customer experiences - and the financial services industry is no exception.
Artificial intelligence is a term used to describe machines with the ability to perform cognitive functions - such as learning and problem solving - normally only associated with the human mind. Utilizing often large volumes of data, AI technologies can serve as a vital tool in the ever-changing world of banking.
Many financial institutions already use AI to some degree. Examples include using voice analytics in telephone banking as a security measure and utilizing AI to perform risk assessments on customers applying for loans. Morgan Stanley, for instance, has an AI Fraud Detection Team, while HSBC uses AI technology to detect money laundering.
There is, indeed, a huge range of different possibilities for AI within the banking sector.
What Are the Pros and Cons of AI?
It's a simple question that can't be simply answered, for it depends on the area in which AI is utilized - there can be different advantages and disadvantages depending on the individual case.
We've already touched on the pros, such as fraud detection and risk assessments. AI can process information at speeds that would be impossible for any human to achieve and, in turn, make instant decisions based on the results of the analysis. It can also detect patterns within data quicker than a room full of mathematicians, so things like fraudulent activity can be spotted more efficiently, helping to keep customers safe and preventing costly losses.
However, as with almost everything in life, there are also downsides to artificial intelligence. While AI systems can gradually learn and improve to the point where they can make their own decisions, they can't make judgment calls. While humans are just as capable as any machine to take action based on the cold logic of data, they can also act on instinct - something that AI is unlikely to be able to do any time in the foreseeable future.
A second and more obvious downside to AI is the cost. While many institutions have innovation budgets of a substantial size, these budgets encompass all aspects of innovation within the company - not just new-fangled AI solutions, none of which are cheap.
That said, the right AI solutions should be considered business investments, rather than business costs. If customer experiences can be improved to the point where true market differentiation is achieved, reputation is improved, and more customers start walking through the door, it's an investment well worth making.
AI-Driven Customer Service
This is the area in which such artificial intelligence investments will likely be made most frequently. Why have a call center full of people dealing with routine issues when AI can do it all for you?
In April 2019, Wells Fargo began piloting an AI-driven chatbot through the Facebook Messenger platform. The virtual assistant communicates with Wells Fargo customers to provide basics like serving up account information and helping customers to reset passwords - at once freeing up call center staff to focus on more complex matters while providing added convenience for customers.
"AI technology allows us to take an experience that would have required our customers to navigate through several pages on our website and turn it into a simple conversation in a chat environment," said Head of Wells Fargo's Innovation Group, Steve Ellis. "That's a huge time-saving convenience for busy customers who are already frequent users of Messenger."
Bank of America has a similar AI-powered chatbot solution making lives easier for customers. Named Erica, the virtual assistant uses predictive analytics and cognitive messaging to provide financial guidance to BofA's customers. Erica has now surpassed 6 million users and completed more than 35 million client requests.
"Since launching Erica's proactive insights late last year, daily client engagement with Erica has doubled," said Head of Advanced Solutions and Digital Banking at Bank of America, David Tyrie. "Consistent with our high-tech, high-touch strategy, we'll continue evolving our best-in-class digital banking capabilities, including Erica, to provide clients relevant, timely guidance and help make managing their finances easier."
From conducting risk assessments to detecting fraudulent and money-laundering activities, AI has the potential to help banks become more efficient in a number of ways. But it's in improving customer experiences where real market differentiation can be achieved. CX is indeed the new competitive battleground, and by investing in AI-powered customer service solutions, banks can start putting around-the-clock convenience to the fore and win the loyalty of both new and existing customers.
Artificial intelligence is set to be a hot topic at Future Branches Austin 2019, taking place this November at the Hilton Austin, Austin, TX.
Download the agenda for more information and insights.