The banking industry relies on risk predictions to develop investment opportunities for individual account holders. It must also establish protocols and procedures to identify customers, prevent money laundering activities, and reduce issues of identity theft and other forms of fraud. Manually reviewing all of the information that clients provide is a tricky, complicated process.
Humans that create risk profiles must step outside of their belief systems, personal limitations, and fragmented perspectives of the world to analyze raw data to determine if a specific interaction offers value. Artificial intelligence automates that process with the crispness of machine processing to ensure that an accurate profile develops for each client encounter.
Artificial intelligence is already looking for money and accounts that terrorists use to fund their activities through military applications. Celebrities use this technology to identify known predators who attend events to add another element of safety. Airports use AI as a way to identify potential suspects in open investigations, and future uses could involve disease tracking stats, like a person’s temperature, in the wake of the global COVID-19 emergency.
According to Deltec Bank, Bahamas, “Banking in 2025 will combine all of these approaches to create a comprehensive AI solution that mitigates risk, improves the customer experience, and creates new opportunities for wealth management – and it can all be automated.”
AI Can Help Invisible Banking to Become Relevant
Artificial intelligence will help digital banking become less visible by 2025 because these activities will become embedded in all of our routines. Voice interfaces, emerging technologies, and the lingering effects of social distancing all encourage account management that consumers do not need to think about when completing specific activities. A customer could tell their institution that they want to save money for their child’s future tuition needs, and the money could get automatically moved to a designated account with investment choices.
The invisible bank fueled by artificial intelligence could offer business access to lending products at the exact moment that more liquidity is necessary. Consumers could receive instant discounts when completing a transaction. That means the industry can use AI to become a behind-the-scenes entity that gets embedded into everything people and businesses do every day.
Although the changes that artificial intelligence can inspire will not happen overnight, the seeds of opportunity are already sprouting to help the banking industry get all of the hassles out of the way for consumers.
App Development Promotes Financial Wellness
When banking services are part of the background economy, then the advantage of having access to money while decreasing the time required for payments is beneficial to local, regional, and national economies. It also means that it will be easier for individuals and businesses to spend the money that they have rapidly. That means the industry must work on solutions that show real-time spending habits.
Several institutions are introducing AI-fueled financial wellness apps that show where money gets spent through the use of visual representation. Traffic lights, pie charts, and bar graphs can show where spending might be out of control. It might not seem like much when one spends $4 on coffee every morning on the way to work, but that habit can be $80 in monthly expenses that could get trimmed back a little to manage other costs.
Since banking-in-the-background involves hassle-free transactions, many people may not even remember what authorizations they have allowed for an account. AI can help consumers to recognize when the value of spending doesn’t equal the results received to reduce needless wealth loss, creating a segment of behavioral economics that would be periodically reviewed through the implementation of this technology.
AI Creates Banking-as-a-Service (BaaS) Opportunities
FinTech companies and banks have fought each other over the past decade about who gets to control customer data. Each side blames the other for holding up opportunities or encouraging unsafe behaviors. New artificial intelligence developments mean that by 2025, this battle will end because BaaS opportunities allow both segments to use application programming interfaces to share information.
Banks can use AI to strike deals with other companies to offer access to lending products through third-party interactions. That means any business could provide loans without needing to be part of the banking industry. Artificial intelligence applications can build networks for financial services institutions that cover all potential activities that a customer might require to manage their wealth. Then the technology can analyze individual situations to offer suitable solutions that a client could apply for at that exact moment.
Invisible banking requires an adjustment from the consumer because third-party services can make it seem like someone else is offering account access or lending products. Banks are comfortable with this idea because their goal is to provide clients with good loans at competitive rates. Whether the consumer understands that they used an intermediary to access the item or not is not of concern to lenders.
Why Banks Are Focused on AI Opportunities
Artificial intelligence and automation could save North American banks over $70 billion by 2025. This technology could reduce the number of workers needed to provide frontline services while boosting productivity simultaneously. When the savings extend to every corner of the financial services industry, then the total amount could reach $140 billion. AI enables people to focus on activities that promote high-value work, such as building customer relationships or inventing new products to offer.
According to Accenture, almost 50% of the tasks currently performed by customer service representatives, tellers, personal financial advisers, and loan officers could be augmented or automated by the implementation of AI technology. Banks could automate up to 10% of all tasks by 2025 with artificial intelligence, boosting their productivity savings and cost risks.
Banks must shift their approach to hiring to achieve these outcomes. A scarcity of cyber-related digital and data skills exists in the marketplace right now, which means the financial services industry must make re-skilling a top priority. Then institutions can work to become part of the background for individuals and businesses to create hassle-free methods of money management that lead us all to improved wealth as the year’s pass.
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.