Home > Mechanical > How AI Will Upset Financial Services Industry

How AI Will Upset Financial Services Industry

How AI Will Upset Financial Services Industry. With a fast-paced world becoming a global village where customer-interaction personalised and a click-away, technology is, no doubt, playing a key impactful role in redefining the operations of finance and banking sector, including the consumer experience. Artificial Intelligence is the new buzzword and trending focus across the financial world. Can Nigeria’s finance services industry benefit from the application of Artificial Intelligence without major collateral damage?

Today, it is easy to get carried away by the buzzword of artificial intelligence, especially with huge noise made about it. But, in its current form, its application is helping improve and transform industries across developed countries, especially in the financial services sector. The big question amongst the third world countries is, how would artificial intelligence assist the financial services industry in Nigeria? If Nigeria gets it right, the likelihood that Africa would speedily join the bandwagon is high.

Every fintech application or new piece of banking software is presently accompanied by bold claims about its use of AI, even though in many cases, they are simply upgraded algorithms. In truth, such advanced filtering applications are already available. They are just one of the AI-driven applications that are going to transform the way customers view financial organisations, especially in the retail banking and lending sector.

General purpose technology is a term economists reserve for technologies that spur protracted economic growth and societal advancements, revolutionising the operations of households and corporations alike.

According to a recent Harvard Business Review study, artificial intelligence (AI) is designated as the most important general purpose technology of this era. With increased familiarity with the power of Artificial Intelligence, it manifests in the form of a robot defeating a world-renowned chess player, a car that can parallel-park itself devices that respond with tomorrow’s weather when we ask. But much of man’s contact with—and understanding of—AI revolves around products that affect the consumer’s every day.

At the various levels in Nigeria’s financial services sector, there’s a larger question around how AI will disrupt industries, and specifically, how financial services will harness AI.

What could be timelier in Nigeria is when the financial service providers and relevant authorities open up banking revolution by placing greater requirements on banks to use technology for more effective engagement with customers, without having to down tool a chunk of its workforce. It all adds to the competitive pressures on banks and fintech companies.

How will AI change banking?

As they slog it out in this intense atmosphere, financial organisations will quickly find they must embrace AI, given the range of applications now operational, such as chatbots, virtual assistants or automated personalised review summaries in developed climes.

A compliance analyst and market research specialist with Data Pro Limited, Dele Adeoye, said analysts forecasted that, “more than 85 per cent of customer interactions will be managed without a human by 2020, whilst he believes that chatbots and other virtual assistants will become the primary consumer AI applications over the next five years.”

There is indeed every reason for banks to deploy solutions like chatbots to engage with customers seeking help or information, just as online retailer’s applications, for instance recommends outfits to shoppers based on the style of clothes they prefer. Banks and insurers know their customers far more intimately than fashion retailers and with AI to analyse the data, can make highly relevant recommendations about financial products and services.

READ ALSO  Google Could Have Shared Your Private Videos With Strangers

Technology professionals allude to the fact that AI solutions can also head off potential problems before they develop, learning to detect the ‘distress’ signals and react accordingly. Experts opine AI is a huge driver of efficiency in customer-service, facilitating rapid expansion and keeping a cap on recruitment costs.

Voice-based Assistance

A unique advantage to AI-driven innovation is the voice-based assistance feature which allows the user to use banking services through voice commands rather than touching their mobile phone or any other device.

Greater Insights into Data Analytics

AI can dig deeper and get better insights into the existing and newer data to look for trends and patterns leading to the delivery of a better service to a customer. With ever increasing data, AI can efficiently examine raw data to excavate important information.

The Future

Artificial intelligence in finance is able to continuously learn and re-learn the existing data, patterns which affect the finance industry, as it provides a great scope for developing current products and services an opportunity to develop these existing products in the portfolio. Artificial intelligence can regularly study the market to know what the consumers are looking for and can provide them with those services before anyone in the market.

Meeting the Demands of New Generations

There certainly is no alternative to AI-adoption unless a bank or financial institution is determined to lose out to competitors. It is clear that today’s consumers – especially the under-35s – will head elsewhere if they are not given fast responses and quick, effective solutions to their problems.

For marketing reasons, advertisers, business owners, brand custodians and investors, this generation is presently engaging with banks and wants to do more with lenders, insurers and mortgage-providers in more meaningful ways – preferably using a mobile device.

New generation is a demographic moving into the mortgage market, gaining higher salaries and having families. They cannot be ignored and while fees and charges matter, the use of technology is a major factor in whom they should bank with, especially when it comes to customer-facing technology that makes interaction easier and increases personalisation.

Personalisation is essential to winning customers when a simple mouse-click is all it takes to switch between competitors. What builds loyalty and increases revenues, is treating customers as individuals, recognising them each time they interact with a business so that their specific requirements are always met.

Less Human Intervention

There might no longer be a need for specific personnel to answer questions about financial services being offered and how they can help the customer. Now, AI processes data to solve queries and suggest the best service or solution for an individual without human intervention. Human opinions are no longer needed to forecast the demand of financial services.

What might pose a difficulty across the industry, however, is the banks might be short of the capacity and expertise to develop AI initiatives. Yet this is not an insuperable difficulty. Many organisations are already realising that off-the-shelf solutions with their plug-in-and-play ease of integration will enable them to meet these challenges immediately.

Fraud Detection

Artificial intelligence can proactively detect whether fraud is going to take place in a financial system or not. AI makes it a point to keep all things secure and take steps towards safety before any chances of fraud can occur. Fraud detection through AI can help bankers follow the policies and regulations while providing a financial service to an individual. AI is expanding the financial products portfolio by continuously understanding the human psychology.

READ ALSO  Bank CEOs Plan Digital Process To Tackle Forex Fraud

Compliance Considerations

Speaking on key compliance considerations relating to the use of AI in the provision of financial services, Abimbola Adeseyoju, Managing Director, DataPro Limited, ‘‘With the emergence of AI, financial industry would be devoting increased amount of money, attention, and time to developing and using AI approaches. This is a result of several significant factors, including the increased accessibility of the three key components of AI — algorithms, processing power, and big data. We are already seeing the ways in which AI is and will continue to impact the banking sector. These impacts range from combining expanded consumer data sets with new algorithms in credit underwriting and insurance pricing, to the use of chatbots (rather than live operators) to provide assistance and financial advice to consumers, among others. With AI, compliance and risk management by banks comes to the fore, as it would boost fraud detection, capital optimization, and portfolio management.’’

In Nigeria, the use of AI in financial services is still not in use, and might soon be receiving increased attention and regulatory scrutiny. Regulators are aware of and paying attention to the application of AI in the financial services industry. Local regulators would be faced with the task of first looking to existing laws, regulations, guidance, and supervisory approaches from developed climes, especially as they begin to evaluate the appropriate regulatory and supervisory approach for AI uses.

Besides, most banks will need to resort to using non-bank vendors in order to take advantage of AI approaches, including chatbots, anti-money-laundering/know your customer compliance products, or new credit evaluation tools. Financial institutions could be adopting the regulators’ risk-based supervisory approach in their use of different AI approaches.

Speaking on the unique essence and pivotal role AI would play in the global economy, Femi Jaiyeola, Fellow, Compliance Institute of Nigeria and the Association of Chief Compliance Officers of banks in Nigeria, said, ‘‘With the pivotal role of the Banking and Financial Services Industry in general to the global economy, one would expect that AI by now, would have dramatically changed the face of the industry. However, the level of adoption of AI in the Banking and Financial Service sector has been a bit limited.

This is partly attributable to the relatively complex regulatory environment and the conservatism that has been typically associated with the industry over the years.

AI Challenges to Financial Institutions

Like the rest of the financial industry, regulators are also learning how AI tools can be used in the banking sector, and should for this reason and more, be open to conversation and feedback. Technological change and innovation is occurring at a fast pace. As is commonly said, the laws and regulations (and the regulators themselves) struggle to keep up with advances in technology, and this may be especially so for the intersection of fintech and banking. Balancing stability and innovation is not always an easy task. But Nigerian regulators, again, should be open to discussion and feedback concerning the AI approaches and other innovations banks and other financial services firms are exploring, and how such approaches and innovations may intersect with existing laws, regulations, guidance, supervisory approaches, and policy interests.

Source: Thisday

Total Views: 393 ,

20 thoughts on “How AI Will Upset Financial Services Industry

  1. Pingback: Dentist Compton
  2. Pingback: w88th
  3. Pingback: Torres
  4. Pingback: 인터넷카지노
  5. Pingback: ty le ca cuoc
  6. Pingback: cbdque
  7. Pingback: porn
  8. Pingback: copy best iwc
  9. Pingback: Büyük sivas
  10. Pingback: BandarQQ
  11. Pingback: addiction
  12. Pingback: porn
  13. Pingback: Covid-19 hoax

Leave a Reply

Your email address will not be published. Required fields are marked *