How Can Adoption of Artificial Intelligence in BFSI Industry Help in the Growth of Your Business?

Key Takeaways:

• Introduction
• Advantages of using artificial intelligence for financial services delivery
• Three innovative use-cases of AI in BFSI

The biggest technological breakthrough of the 21st century has been the advent of Artificial Intelligence (AI). The basic premise of Artificial Intelligence is to develop intelligent machines that can solve problems or make decisions similar to the human mind’s capabilities. Almost all information technology companies have invested heavily in the development of AI owing to its potential to transform any industry. The use of artificial intelligence in the BFSI industry has become one of the best examples of the transformative nature of this advanced technology.

How does Artificial Intelligence help in solving the problems faced by the BFSI industry?

Currently, the banking, financial services, and insurance (BFSI) industry is riddled with numerous problems including data management concerns, regulatory compliance issues, lack of infrastructure, etc. These problems reduce the profitability of the banks, which in turn causes a slowdown in the economy. AI in BFSI can help in solving these problems and overcoming the challenges associated with them.

Firstly, increasing penetration of smartphones, growth in online banking, and surge in digitalization has led to massive rise in data. Collecting, updating, and storing this data becomes unmanageable if proper systems aren’t used. AI can help in this aspect by structuring the data according to its type, predicting the nature of data, and offering security solutions for confidential data.

Along with this, AI can help businesses understand the complex web of regulations and legislations which the bank needs to comply with. Not only that, but it can also help in reforming the front and back-office operations which will help the bank to align itself with the policies. Furthermore, artificial intelligence in BFSI can help financial institutions to stay ahead of their peers by offering their customers personalized financial services and bringing out new offerings for their clients. Another crucial advantage of integrating Artificial Intelligence in the BFSI is that it aids in scaling of operations; also, the technology is compatible with other advanced technologies such as big data, cloud computing, etc.

Three novel use-cases of Artificial Intelligence in BFSI

The artificial intelligence in BFSI industry is one of the most promising sectors in the global economy and is set to rise at a CAGR of 32.5% during the 2023-2032 period. The growing preference for personalized banking, financial, and insurance services is the main factor influencing the rise of the industry. Apart from this, another major reason is that in the banking sector, unlike other industries wherein use of AI is only in its conceptual stage, the technology can be used to develop solutions that can be easily implemented, and every customer can benefit from use of these solutions. Some of the implementable use-cases of Artificial Intelligence in BFSI are discussed below:

Customer service chatbots

Use of AI for development of customer service chatbots has positive consequences for both banks and customers. From the customer side, these AI-powered chatbots help in addressing different types of queries and problems faced by customers. These chatbots can answer questions ranging from balance enquiry to loan eligibility criteria. The personalized grievance redressal mechanism put in place by these chatbots helps in increasing customer satisfaction. From the business side, deployment of these chatbots helps banks to reduce the manpower employed for grievance redressal. Instead, this workforce can be used for productive work and, thus, maximize the profit.

Fraud detection

The increasing sophistication of white-collar crimes and banking frauds necessitates the use of alternative and high-tech mechanisms to tackle this issue. A study done on financial frauds has shown that the biggest change AI can bring is in the fraud detection segment. Reduction in monetary frauds can be achieved by using AI to increase the security of bank accounts. Protection of confidential bank user data is the most important step in which AI can play a huge role. It can also be used to monitor and safeguard internal bank operations to prevent data theft. Additional layers of security can be deployed, and suspicious activity can be traced regularly to bring down the incidence of cyber-attacks.

Industry trend prediction

Banking automation by deploying AI can help financial institutions to understand the metrics of the BFSI industry comprehensively and analyze the patterns influencing the industry. This ultimately aids in predicting how the industry will pan out in the future. Thus, formulating policies for increasing the profit share during economic growth becomes easier. Furthermore, industry trend prediction plays an important role in cautioning the bank about a possible slump, thus aiding the bank to strategize accordingly and minimize its losses.

To sum it up, the use of artificial intelligence in BFSI can help in improving efficiency in data management, fraud detection, pattern analysis, etc. The growing demand for personalized banking and financial services is further expected to expand the scope of the industry in the near future.

For tips and suggestions on how to boost your business by capitalizing on the opportunities offered by the artificial intelligence in BFSI industry, feel free to contact us.

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