Latest Advancements in AI and What's in It for Financial Institutions
By Srinivas Njay, Founder & CEO, interface.ai
September 21, 2023
Artificial Intelligence (AI) has revolutionized numerous industries, and the financial sector is no different. With its ability to enhance member experiences and optimize operations, AI has become a game-changer for financial institutions. In this article, we will delve into the latest advancements and predictions in AI, exploring how they benefit the financial industry.
Generative AI, in particular, holds immense potential for financial institutions. By harnessing generative AI, financial institutions can transform member and employee experiences, streamline operations, detect fraud more effectively, improve risk management and enable dynamic forecasting and reporting. To illustrate these possibilities, we will examine each use case in detail, providing concrete examples of how these transformative outcomes can be achieved.
1. Reimagine Member and Employee Experiences
Use Case: Personal Loan Process – Our traditional approach is when you're processing your loan, the credit union or bank evaluates based on present parameters and decision-making. Manual repayment is managed by the member or customer, but with generative AI, the AI would be capable enough to understand the nuanced financial and personal data of the member or the customer and make personalized recommendations, and proactively manage repayments by monitoring their current financial condition. As members, we no longer need to worry about ensuring we have enough cash to cover mortgage or car payments. The introduction of AI alleviates this stress by actively assisting members and customers in effectively managing their finances. It will allow individuals to focus on their financial well-being and provide them with a greater sense of control over their personal finances.
2. Cost-Efficient Operations in Banking
Use Case: Loan Approval Process – In the traditional loan officer role, gathering and managing data manually from multiple systems can be a time-consuming and labor-intensive process. However, with the integration of generative AI, the landscape changes dramatically. By training AI models on historical data, loan officers can instantly access responses and insights derived from aggregated data. This not only helps ensure compliance and streamline the loan application process but also significantly improves overall efficiency. With AI's assistance, loan officers can confidently address any compliance risks, while financial institutions benefit from faster loan processing and a positive impact on their top line.
3. Better Compliance
Use Case: Fraud Detection in a Financial Institution – Fraud detection in a financial institution relies heavily on pre-set rules, leading to high false-positive rates and manual investigation of alerts, which is inefficient and labor-intensive. Today, the billions of dollars currently spent on compliance are only 3% effective in stopping criminal money laundering. With generative AI capabilities, the AI efficiently collates relevant data across systems, assists in the rapid identification of real issues using pattern recognition and anomaly detection, detects new patterns of money laundering, expedites document analysis, supports officer training, and overall ensures better compliance. The shift to AI-led compliance reduces manual workload, improves accuracy in detecting illicit activities, saves time and potentially decreases operational costs, leading to more effective use of resources and increased security for the FI.
4. Improved Risk Management in Banking With Generative AI
Use Case: How an FI Assesses Market Risks – We have all gone through the recent struggles of what happened with SVB and other banks. Financial institutions manually analyze market risks by processing unstructured data, reacting to real-time insights, conducting simple predictive analytics and integrating systems, leading to delayed and less accurate assessments. Generative AI can play a huge role in managing risk for financial institutions. It can auto-process vast unstructured data, instantly adapt to real-time insights and run complex predictive analytics, enabling faster and more precise market risk analysis. This ultimately results in better strategic decisions, cost savings and potentially increased profits.
5. Dynamic Forecasting and Reporting in Banking With Generative AI
Use Case: Finance Team Operations in an FI – Generative AI can transform how financial institutions handle forecasting and reporting. The latest AI algorithms can analyze financial data, market trends and external factors to generate accurate forecasts and predictions. This empowers finance teams to make data-driven decisions, optimize resource allocation and anticipate future market conditions. Additionally, generative AI can automate the report generation process, reducing manual effort and ensuring timely and accurate reporting.
The integration of AI, particularly generative AI, has the potential to revolutionize financial institutions' operations and services. From improving member and customer experiences and optimizing operations to enhancing risk management and fraud detection, the applications of generative AI in the financial sector are vast.
Financial institutions that embrace these latest advancements will gain a competitive edge, improve efficiency and deliver superior services. As AI continues to evolve, the future holds even greater possibilities, making it essential for financial institutions to stay at the forefront of AI innovation to thrive in the dynamic financial landscape.
Watch the latest interface.ai webinar to learn more about “Banking in the Age of AI”.
interface.ai is a market-leading provider of Intelligent Self-Service for credit unions. interface’s Artificial Intelligence acts as a “personal bank teller” to help members 24/7 through every step of their journey from being a prospect to achieving financial wellness.
interface.ai currently powers several credit unions across North America, has enabled millions of dollars in savings for its CU customers, and is one of the fastest-growing credit union providers, growing at over 1500% just in the last year.