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Customer satisfaction is critical for traditional brick and mortar banks to justify their presence and differentiate themselves from dozens of challenger banks and lenders emerging online. Although all banks have tomes on “policies” framed on how to improve customer experience, yet the low Net Promoter Score highlights the problems plaguing the industry.
On the other hand, digitalization has reshaped the banking industry. According to a report by Global Banking Outlook 2018, it is expected that 62% of the banks will become leaders in the implementation of digital technology by the year 2020. Artificial intelligence and Blockchain have emerged as key enablers of this digitalization process.
Understanding the terms
Amazon has defined artificial intelligence as “the field of computer science dedicated to solving cognitive problems commonly associated with human intelligence, such as learning, problem-solving, and pattern recognition.” It went onto state “Without ML (machine learning- a subset of AI), Amazon.com couldn’t grow its business, improve its customer experience and selection, and optimize its logistic speed and quality.”
According to the Tractica, a market research firm, it is expected that the AI market will grow to $118.6 billion by the year 2025. Many businesses have already adopted artificial intelligence in their operations in order to attract and retain modern tech-savvy customers. In the financial services industry itself, 32% of the businesses are making use of AI in different forms.
So is AI only some backend tech that common customers do not get to experience? When you are interacting with a website Chatbot, text suggestions while typing an email and Amazon suggesting what best goes with your current purchase, all are powered with Artificial Intelligence.
Blockchain is defined as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.
Blockchain is all the rage nowadays due to cryptocurrencies like Bitcoin and Ethereum. But it has a myriad of real-world applications. It can assist the banking sector in processing payments faster and reduce the cost of operations by saving billions of dollars. It is predicted that the Blockchain market will be worth $20 billion by 2024.
Most of the banks have already adopted the blockchain technology in the areas of record keeping, cross border transfers and managing operations at the backend. It will revolutionize customer experience in fields of money transfers, customer record keeping and automating time-consuming processes.
AI + Blockchain: 6 ways to use them to delight your customer
If implemented successfully, Blockchain and AI technology will help the banking industry fight of the following challenges and ensure a better customer experience:
1. Fraudulent activities
Hackers have stolen billions of dollars from the banking system by sending authenticated messages via SWIFT during the last few years. Customer accounts being hacked and credit cards cloned is the new normal. Despite investing massively in cybersecurity and compliance, the frauds are on the rise. Blockchain is a natural solution as its distributed ledger is almost impossible to attack and decentralization allows for transparency across the board. Similarly, AI will help in identifying fraud patterns and stopping hackers before they strike.
2. Time-consuming process
Client onboarding is a process of introducing a consumer to a bank, listening to their queries and making them familiar with the services provided by the bank. In the year 2018, it was found that 38% of new customers discarded their new account opening process, as it was time-consuming. Can banks really afford to lose 38% of customers who are ready to open an account with them? AI-powered KYC automation is the answer to giving customers hassle-free ultrafast processing.
3. Regulatory compliances
Numerous laws and regulations are applicable to banks and financial institutions. Changes in regulations post the financial crisis has also led to increased reporting requirements. The use of Distributed Ledger Technology, on the other hand, has facilitated the documentation to be more accurate as the entire procedure of storage is backed up by an audit trail. And AI takes the repetitive task away from your branch staff. The result? Your branch is now free to prospect for new customers and give that human touch to clients.
It is estimated by Gartner that by 2020, 85% of the banks and businesses will structure consumer dealings through an AI-powered Chatbot. Further, according to Juniper’s research, it will result in a cost-saving of an estimated $8 billion by the year 2022. This will be a new era of 24/7 service and instant customer support. No more one-hour customer support waiting times for your clients.
5. Interactive Voice Response Systems (IVRS)
IVRS is a cost-effective system used to handle queries of customers. In a month, around 70% of customer calls are handled by the IVR system which assists customers in knowing their account balance, receiving investment updates, loan status, and product information, etc. Making IVRS “smarter” using AI would further drill down the number of calls the bank needs to field from its clients.
6. Cheaper transactions
Blockchain has emerged as a viable alternative for banks to make transaction processing cheaper and faster. Forex transfer transactions, which earlier took 2-3 days to verify, can now be executed instantly through ledger entries. The blockchain solution helps customers improve their liquidity, especially for forex transactions. It also reduces transaction charges by over 50%. A sure way to make a customer happy.
Artificial Intelligence and Blockchain are emerging technologies that are reimagining multiple industries. Banks can get a leg up in the digital race by integrating their offerings with the power of AI and blockchain-powered solutions.
It is essential for a financial institution to execute a 360-degree analysis of their current customer experience. The first mover’s advantage in introducing AI and Blockchain to banking solutions could provide a defensible long-term moat. The scalability, security, and cost-effectiveness offered by these two technologies make it a must-have in your bank’s digital arsenal.
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