A version of this article first appeared in Eltes BFSI
The financial services sector, traditionally cautious in adopting new technologies, is now undergoing a transformative shift with the integration of artificial intelligence (AI) and cloud computing. Through the latest technologies, consumers are now experiencing more personalized services because tools like chatbots and virtual assistants are being offered along with a more secure, intuitive use of technology.
Here's how AI appears to be revolutionizing the financial world from a consumer's perspective.
Evolution of Customer Service with AI
In the financial services sector, one of the most noticeable impacts of AI is customer service transformation. This reimagining of the consumer experience is made possible because AI helps financial organizations anticipate individual needs and enable unique experiences, including:
- Instant, personalized interactions: Users of financial services technologies are now experiencing faster, more efficient customer support thanks to AI chatbots and virtual assistants powered by large language models (LLMs). These systems offer immediate assistance, by answering questions or guiding consumers through complex processes. Consumers benefit from these automated, real-time responses whenever extra support is needed—and financial services organizations can efficiently provide this support without the cost of additional customer service representatives because of the latest AI-powered capabilities. The launch of SBI's chatbot, SIA, is a prime example of the bank's use of AI to enhance personalized customer service.
- Tailored banking experiences: Financial institutions focus on human interaction, customer support, and the use of AI to analyze cloud-stored historical data from various consumer interactions with the financial systems. This data helps financial services organizations offer personalized services and recommendations tailored to each consumer's requirements. It also allows consumers' future needs to be anticipated, which enhances the overall user experience and saves consumers time from endless scrolling.
- Personalized financial advice: Data analysts and strategists are revolutionizing wealth management, banking, and insurance with AI, providing personalized financial advice. Predictions and forecasts from AI tools assist consumers make informed decisions be it for long-term investments or everyday financial matters. This level of personalization gives peace of mind, especially in cases where consumers are not familiar with market trends or the best available options. Such personalized advice helps financial service providers in building trust and more reliable engagement with their consumer base. For instance, personalization could give financial institutions a unique opportunity to capture market share from the rising high net-worth individuals (HNWIs) in India –which has the second-highest number of HNWIs amongst BRICS countries– and increase the volume of investments from both new and existing customers.
- Scalability and flexibility: AI solutions that are built with cloud technology allow financial institutions to scale their IT infrastructure based on evolving needs, optimizing resource usage and reducing costs. They can flexibly handle growing demands without overspending on on-premises infrastructure, avoiding passing those costs on to the consumers. It also benefits consumers because the financial services organization can rapidly scale in response to India's growing digital banking sector, due in part to the widespread adoption of smartphones.
- Automation of routine tasks: AI automates repetitive tasks such as data entry, reporting, and customer service, boosting operational efficiency. This not only reduces labor costs but also allows human employees to focus on value-adding activities that directly benefit the consumer base. While much of this work related to a company's operations will be behind the scenes for consumers, it will greatly enhance the speed, professionalism, and overall quality of the interactions with a financial institution. Ultimately, this will result in a seamless, positive consumer experience, which can ensure customer satisfaction and loyalty.
- Enhanced security and fraud detection: Consumers now enjoy better protections because financial services organizations can use technology to identify unusual transaction patterns. With speed and precision, AI adds a robust layer of protection for consumers, reducing the risk of financial crime. With a rise in loan applications, the financial sector is increasingly leveraging AI to accelerate the background check and evaluation processes. AI enables faster credit assessments, and quicker loan approvals for consumers, minimizing the likelihood of defaults, and enhancing overall financial stability.
How AI Empowers Consumers in Real Life
AI is transforming how financial institutions interact with consumers through:
- Seamless payment integrations: The integration of AI with financial systems allows for faster, user-friendly payment systems, and a variety of secure transactions on the same user platform. With the latest payment solutions, consumers benefit from real-time updates to their accounts and enhanced security measures that safeguard their personal information.
- Automated data backup and recovery– AI helps automatically back up critical data in real-time. This reduces the risk of consumers' data loss due to human error.
- Technology-enabled targeted marketing: AI analyzes customer interactions and behaviors to predict consumer needs, enabling more precise, targeted marketing by financial institutions. The technology enables better decision-making, which ultimately increases customer satisfaction and engagement.
Examples of today's consumer-centric technologies include:
- Unified Payments Interface (UPI) is expected to revolutionize the way people conduct digital transactions using AI. What sets it apart is the added layer of security that AI will bring to the process. This is likely to accelerate UPI's growth even further, setting new standards for how secure and user-friendly digital payments can be.
- SBI (State Bank of India) has developed its own domain-specific LLM, reflecting a commitment to digital transformation and long-term innovation. This initiative is part of the bank's larger strategy to harness AI to improve operational efficiency, enhance customer service, and bolster data security.
- AI-powered fraud detection: Many credit card companies use AI to detect fraudulent transactions in real-time, which allows the companies to alert consumers and work together to proactively address any issues.
The Outlook for AI in Financial Services
AI is transforming the way consumers interact with financial institutions. From delivering personalized customer service to strengthening risk management and fraud detection, AI innovations can keep consumers more engaged and well-served. While the integration of AI and cloud computing presents numerous benefits, companies must remain mindful of data privacy and the ethical use of these technologies. AI advancements promise to create a more transparent, secure, and efficient landscape for consumers and financial service providers alike.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
