Today, we are living in an era of “Digital Transformation” and “Digital Disruption”. Firms are adopting the latest technologies like IoT, AI and Cloud services to automate their business operations and remain competitive in the markets. True digital transformation, however, involves a customer centric, inside-out perspective to enable the design of digital solutions that drive customer loyalty, engagement, consumption and satisfaction. Therefore, it is not surprising to see more and more financial firms adopting Artificial Intelligence or AI technologies every day, to improve customer experience. Let’s take a look on how AI is impacting the services offered by financial firms.
Personalization and Reduced Costs
AI expanded the scope of “Consumer Financial Services” by offering customised financial solutions to customers that automatically suggest the suitable style of spending, saving, investing etc. based on their financial data and personal habits. This helps in forecasting the demand for a certain policy or investment accurately and the firms can make timely decisions.
Also, the processes are automated to a high extent due to AI. Consumers can have their financial portfolio managed at literally no management fees and with high efficiency, as opposed to availing the services of a traditional advisor who may charge around 1% of the investments. This reduces the costs of financial services to great extent and attracts a large section of the population to financial services, who previously found them cumbersome, expensive, and time-consuming.
Prevention of Fraud
AI can simulate a variety of situations where a cyber crime or a fraud can occur. Based on this data, we can design an environment-safe and breach-proof financial service system rather than adding enhancements to it after the security breach occurs. Also, AI ensures 100% compliance of policies, regulations, and security measures being adopted, thereby reducing the risk of fraud to a great extent.
AI in finance works on vast volumes of data using complex statistical models, over long periods of time and gains thorough understanding of patterns, data, and developments in the financial world. So, it can give the accurate insights into customer’s behaviour and environmental changes that could affect the firm and help in making critical decisions. AI gives you the flexibility to build upon your current system or line of financial products and services. So, we need not start things from scratch and can continuously improve the quality of the services offered based on these insights.
AI is no longer the technology of future. With a growth rate of 56% experienced by this industry (according to Tractica) annually and the range of benefits offered, we can expect a completely transformed and digitized financial services industry very soon.