The Future of Banking

AI and Banks: Why the Sector Essentially Needs to Make a Digital Jump

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Amid recent technological advancements and the emergence of the so-called artificial intelligence, the banking sector, especially large banks, has been keen on keeping up with it for overall internal and external operations. Bank Executives are considering AI strategies and AI-enabled digital transformation to best capture the opportunity and stay ahead of competition.

AI technology has become a necessity that ought to be deployed by all banks, as it helps banks in many areas including front, middle, and back-office. The following are the areas in which AI contributes to enhancing banking operations.

Reduced Operational Costs

The three main channels where banks can use artificial intelligence to save on costs are front-office (conversational banking), middle-office (fraud detection and risk management), and back-office. Front and middle-office AI applications offer the greatest cost savings opportunity across digital banking. Banks can leverage algorithms on the front end to smooth customer relationships and mimic live employees through voice assistants. And within middle-office functions, leverage algorithms to assess risks, detect and prevent any risks and fraud. A tremendous opportunity exists to automate the activities and workflows within the bank’s back-office. Many processes are filled with repetitive, routine, and clerical tasks and often have many individuals processing a single customer request.

Better Customer Experience

Customers are constantly looking for convenience. AI-powered financial assistant, incorporated with Natural Language Processing (NLP), engagess and interacts with customers 24/7 and enhance online conversations. In addition to typical responses to customers’ questions to help them work through their account details, financial assistants can now help in opening new accounts and directing complaints to appropriate customer service units amongst others.

Better Products Offering

AI is changing the quality of products and services the banking industry offers. It has simplified, sped up, and redefined traditional processes to make them more efficient. Banks are leveraging Artificial Intelligence to analyze customer behavioral patterns and automatically perform customer segmentation which allows for targeted marketing and improved products offering.

Simple verification of customers' creditworthiness

Creditworthiness is a method that helps a lender make a decision to either approve or reject lending credit. Utilizing AI solutions, banks can assess creditworthiness and check the financial capacity of borrowers with further accuracy and speed. AI has the ability to analyze large credit record data in real-time; this enables banks to deal with huge credit input and ultimately reduces the expenses of personal credit risk evaluation.

Risk management and fraud detection

Humans often perform periodic checks, to detect a company's financial data risk resulting from either an error or fraud. Nevertheless, there is always room for undetected risk due to incorrect reviews or wrong interpretations of reviews. Accordingly, and in order to provide more security and to better manage risk and detect fraud, AI is deployed. Banks can review and classify large amounts of data without the need for human intervention to prevent fraud before it happens as opposed to the traditional reactive approach to fraud detection.

So What is Next for the Arab Region?

Similar to the global trends, the market has very much been stunned by AI technology. Though this journey is still in its beginning, Bank Executives are realizing the potential of AI and strides are being taken to accelerate this transformation, now more than ever.

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