Today, consumers demand straightforward and seamless engagement across every digital touchpoint when they interact with a business. For the banking sector, the dynamics of consumer preferences open the door to several opportunities, but not without a fair share of challenges.
Studies show that nearly 35% of consumers prefer a digital point of interaction rather than a physical branch visit for any banking needs. In addition to providing a great customer experience, retail banks also need extensive focus on managing risk and lowering the cost of operations.
For years, technology has been the go-to solution for banks to overcome operational challenges. What matters today is the kind of technology they must invest in to solve their present challenges, set the pace for continuous growth, and tackle future obstacles easily. If we look at market trends, then the two most critical technological competencies that retail banks must pursue are - artificial intelligence and cloud computing.
Uncovering New Possibilities with AI
To begin with, here are some of the core benefits that AI helps banks realize:
Deliver Enhanced Customer Experiences
AI-powered chatbots and self-service channels can enable banks to easily engage customers with more personalized interactions. Without any human intervention, AI bots can gather intelligence on customers through conversations. This data can be used for a wide range of services such as banking tasks and solving support queries.
The best part is that most customers wouldn't feel that they are being served by a machine, thanks to generative AI. Another great aspect of customer engagement with AI is the ability to market products based on accurate customer profiles. AI can compile data about customer behavior, which can power targeted marketing campaigns and make them more precise.
Build New Revenue Streams
AI bots can be programmed to understand customer interests and prepare a personalized growth roadmap for their money. In other words, AI can be used to predict and build new investment products that leverage customer funds and provide them with better returns. It can work like a personal financial advisor.
In fact, a leading US bank is already leveraging generative AI to launch personal financial advisory services in an interface as simple as the massively popular ChatGPT.
Streamline Compliance and Reduce Fraud
From evaluating customer profiles for risk to ensuring government regulations are satisfied to manage transaction oversight, AI can help banks streamline compliance significantly.
Security is one of the biggest challenges in modern digital banking environments, and the use of AI to eliminate fraud threats can go a long way in improving customers' trust.
Fraud detection in retail banking has taken a significant leap forward with the integration of generative AI technologies. By harnessing the power of generative AI, financial institutions can now proactively identify and prevent fraudulent activities more effectively. This cutting-edge technology analyzes vast amounts of customer transaction data and generates predictive cybersecurity frameworks that can detect anomalies and suspicious patterns in real-time.
These AI security frameworks can adapt and evolve to recognize new fraud tactics, making it increasingly challenging for criminals to deceive the system. Moreover, generative AI aids in creating synthetic data for stress testing and refining the fraud detection algorithms, ensuring that retail banks can stay ahead of the ever-evolving landscape of financial fraud. In essence, generative AI is a game-changer in the fight against fraud, providing a more secure and reliable environment for both customers and financial institutions.
Making AI flexible with the Cloud
We have seen how AI can help retail banks deliver a transformational change in their customer experience and operational landscape. To make this technical transition smooth, the cloud can be the most efficient catalyst. By leveraging the cloud, banks can supercharge their digital innovations. Here's how:
Scalability on Demand
Banks can run their digital applications on the cloud, allowing them to scale up on computing power or storage or other deployment parameters on demand. This helps in the event of dynamic workloads.
Technologies like AI and big data analytics often involve a large degree of processing and management tasks. These may not be in a fixed-use pattern all through the year. With the cloud, any level of dynamics can be easily handled thanks to scalability on demand. This is true from an operational standpoint as well.
Employees can access core banking products remotely from anywhere on their devices to help customers faster. This is especially useful for cases like wealth management, where advisors often meet customers in their homes or outside locations.
Enjoy Cost Efficiency
With the cloud, there is no need for banks to invest in buying, maintaining, and upgrading powerful infrastructure like servers, data centers, etc. Additionally, there isn't a large expenditure incurred if they opt for more SaaS-based products for different functions.
They only have to pay a subscription fee based on usage rather than upfront capital or licensing fees. All these add up to pretty good savings in the long run, and banks can use their IT budgets more towards other critical investments rather than just hardware or licenses.
Security and Backup
Being in the cloud entails banks enjoying the dedicated security services offered by cloud vendors. Also, banks can add additional layers of security on top of them easily through customizations. In the event of disasters or major challenges, the cloud offers them an easy, fail-proof option to return to service quickly.
With automated backup facilities and secure remote management, it is easier for the cloud infrastructure to survive any major mishaps. Banks need such a resilient digital backend because they deal with one of the most fundamental entities of life – enabling financial transactions.
Summing It Up
Cloud and AI have the potential to transform retail banking in more ways than one. While AI brings in a lot of possibilities to uncover value from data, the cloud forms the fundamental underlying backbone that powers any such innovation. However, the stakes are very high when it comes to banks making effortless progress in adopting ground-breaking technology like AI and the cloud. Doing it in-house would require advanced technical skills.
Additionally, the expertise needed for tools and platforms that help with things like generative AI is even more challenging. What banks need is a strategic roadmap that guides them with the processes, best practices, skills, and tools needed to transition into a smarter business. This is where a dedicated partner like Xoriant can be a game-changer. Get in touch with us to learn how we can help transform your retail banking operations with the power of AI and the cloud.