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Role of Artificial Intelligence in BFSI - Smartly Improving Customer Experience

Exciting times are surely ahead for the banking and financial services industry in India with constantly evolving technologies that promise to exceed customer expectations.

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The Banking and Financial Services Sector has undergone a deep transformation over the last decade. The use of cloud computing and digitization has ensured enhanced customer experience combined with optimization of cost and time. Artificial Intelligence plays a vital role in allowing the banking industry to provide personalized services to customers by understanding their needs and staying ahead of their expectations.

The sheer power of AI has helped banking and financial services organisations to provide seamless, innovative and more delightful customer experiences. AI-powered technologies like Optical Character Recognition allows auto-filling forms by extracting user details from their uploaded identity documents and enables faster customer onboarding. AI allows an accurate and extensive credit risk profiling by using multiple data points from various sources like income statements, employment history, credit score and bank statements.

There are several facets that Artificial Intelligence brings to banking operations which have brought ease and convenience to the customer and made banking a delightful experience.

Real-time insights: Artificial intelligence provides the system capability to understand the needs of the customer based on past activity and data and convert it into insights. This will help the system to address the customer’s issue better. In fact, artificial intelligence combined with edge computing processes the data in real-time and provides actionable information. Yes Bank used AI-built personalized banners to target customers with particular interests and provide tailored solutions at the right time that is helping them reduce their CPA by a whopping 230%.

Speed, agility, flexibility: The speed, agility and flexibility offered by AI are unparalleled. Unlike the traditional banking system which involved a lot of paperwork, the use of AI has made it a contactless, paperless system that can draw up any information within seconds and serve the customer. All activities that required a trip to the bank in the past can now be done within the comfort of the customer’s home. For example, digitising the KYC process by using AI based OCR to verify uploaded documents and NLP to process forms using this information has made it very convenient for customers. This process is being adopted by fintech lenders to process loan applications as well.

Constructive Disruption: The emergence of AI as a powerful force can be called a constructive disruption. This technology disruption has been welcomed by the world as it has transformed the way offerings are presented to the customer by keeping in mind their profile and preferences. Fintech companies that are powered by AI technology are able to offer user-friendly services via online portals or smartphone apps that make transactions in financial products extremely quick, easy and convenient.  For example, the KreditBee app disburses personal loans in 15 minutes from start to finish because of the use of AI to process the customer information from the documents uploaded.

The Powerful combination along with Cloud: AI offers a holistic transformation of the enterprise. In combination with the cloud, it makes organisations more efficient, effective and data-driven. The potent combination offers agility, scalability and cost savings while helping to analyze available data and unlock valuable insights to improve predictive abilities and business outcomes. This is allowing businesses to experiment with new ideas and improve the quality of offerings without loading additional costs.

Reaching the underserved consumer segments: The data revolution on one hand and Artificial Intelligence on the other has helped the BFSI to penetrate the underserved consumer segments. The limitations of physical distance have been successfully eliminated as anyone with a smartphone can access banking services. AI helps to improve the customer experience by enabling smooth workflows at optimal costs and minimal time which creates a virtuous cycle and expands the customer base. Widening the customer base has given the banking industry an opportunity to reach the underserved segments and shift the borrowers from the unorganised sector.

Optimisation of costs: AI-powered chatbots have helped the Banking industry immensely by reducing the resolution time. This helps to optimise operational efficiency and costs while improving the customer experience. AI evolves constantly by learning from the available data and experience and eliminates human errors. The increase in contactless and paperless services has improved the overall efficiency and productivity and led to happier customers. Leading Indian Banks have used AI via chatbots to enhance customer experience like SIA by SBU, iPal by ICICI and EVA by HDFC Bank. ICICI Lombard GIC depends on AI and ML for cognitive computing to reduce the claim processing time.

Improvement in quality due to error detection: The banking system has always been susceptible to identity theft, fraud and security breaches. This can lead to severe damage of credibility with the brand image taking a hit. Today, leading banks are ahead of the curve, using Artificial Intelligence as their preferred business tool to detect errors and frauds early and eliminate them. This has helped them to build customer trust and loyalty and of course, improved financial outcomes. It is important that banks adopt best practices and the latest technology to mitigate the risks of cyber fraud. For instance, PayPal works with H2o.ai using ML and statistical models to identify fraud patterns.

Tailored Customer Offerings: Understanding the customer’s needs is a prerequisite for serving them better. The fintech platforms of today offer a plethora of options to their customers in the form of tailored offerings that cater to the specific needs of the customer. Be it the range of financial products on offer or the methods of repayment, the customer gets a variety to choose from. Some payment companies are increasingly using AI to create personalised payment experience for their customers. AI is used to analyze previous payment patterns and prompt the preferred payment option which is the best fit for the expense at the time of checkout. If a customer regularly favours the EMI option for big- ticket buys, the system automatically makes the best EMI option available to him. Such experiences help to build customer loyalty.

Win-Win Model for Stakeholders: Artificial Intelligence and cloud-based technologies allow banks and financial institutions to develop tech-savvy marketing strategies that enable them to delight their customers and cross-sell or upsell related products to the right customers. BFSI is extensively using AI with cloud computing to onboard and assess customers faster and cater to their expectations. The quick risk analysis helps them to expedite decision making and approvals leading to faster workflows. The automation of credit and risk assessment of customers, claim processing and KYC compliance has provided a great deal of comfort to the banking system and allows them more time and flexibility to manage their customer experiences better.

In today’s digital world, “data” is the new oil and Artificial Intelligence provides enterprises with the opportunity to interpret the humongous amounts of data generated every minute and make sense of it. The role of AI in BFSI is growing in importance and scale and the global spend on AI is expected to cross $300 billion by the end of this decade. A report published by IBEF estimates that India’s digital lending would cross $ 1 trillion in the next two years which clearly shows the extent to which emerging technologies will contribute to the overall growth. Exciting times are surely ahead for the Banking and Financial Services Industry in India with constantly evolving technologies that promise to exceed customer expectations.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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banking customer experience BFSI Sector technology

Praveen Paulose

MD & CEO of Celusion Technologies

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