The buzz surrounding the meteoric rise of cryptocurrency is undeniable. For instance, the sudden growth of bitcoin from a fringe currency to a mainstream cryptocurrency that everyone is investing in lately.
Although its long-term existence is yet to be determined, the growing interest has shown that the latest startups and traditional banks have recognized that the old banking ways could be likened to watching a movie today on VHS.
In its place comes, artificial intelligence, with a promise to redefine how banks work and how customers relate to their banks.
Introducing AI to the Digital Shop Floor
The role of AI in banking is mostly signified by the digitization of banks whereby instead of dealing with human tellers or physical branches, customers carry out their banking needs online.
N26, a German-based startup, is one of the companies that has strived to be at the front row seat as far as the new age of mobile banking is concerned. It recently culminated its Series C financing round worth $160 million, which propelled it into one of the fastest-growing banks in Europe.
N26 is convinced that AI could allow future banks to become more adaptive to their clients’ needs as well as solve problems in a manner that is now lacking amongst traditional retail banking institutions.
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Banking Firms have to Rethink their Relations with Customers
By evaluating customer transactions and data, a mobile bank can know what kind of services to pitch to you including standing orders or savings accounts.
According to Yvonne Browne of Accenture, the diverse requirements of customers nowadays are forcing banking institutions to re-strategize their interactions with their customers to acquire insights into the ideal services and products that appeal to them.
She added that AI-driven tools boast the ability to assist banks in identifying customer preferences and empowering their employees, especially in reacting with emotional intelligence and insight.
Function of PSD2
PSD2 is expected to drive successful AI developments into the finance space. It is the recently implemented EU regulation that enables banks to work together with third-party startups in a bid to improve the use of customer data.
Since information rests solely at the heart of all good machine learning and AI systems, PSD2 will unlock a new space for AI thinkers, particularly those outside the finance industry to explore.
The combination of PSD2 and AI could have a dramatic effect on the manner by which banks conduct their business with customers. In fact, the collaboration could touch key areas such as know your customer (KYC) and others like security.
Since the start of the century, available digital systems have been developed to identify peculiar transactions. However, they have assumed a blanket approach, whereby each transaction requires human beings to follow-up.
With a sufficient artificial intelligence system in place, a human operator could go through dozens of such transactions faster. According to Yvonne Browne, it is yet to be seen how banking institutions would handle the integration of AI in banking. However, she added that if they fail to utilize digital technology in replicating the banking intimacy associated with traditional models, someone or something else might bypass them.