The recent emergence of Artificial Intelligence (AI) in mainstream applications has added a new dimension in the Banking industry for last 5 years. There had been an adoption of AI in almost all verticals of banking that includes security, operations, marketing, customer acquisition, and services. Standing in the year 2020, it is very exciting to anticipate that in which direction this collaboration of AI and banking is heading towards in the next 5 years.
It is worth noting that with each passing day the field of AI is seeing stupendous progress in the research area along with some great practical results. So it is very unlikely that the implementation of AI in any industry, including banking, is going to stall anytime soon. As per a report published by Statista, the banking industry would be able to derive a business value of $182 billion globally with artificial intelligence by the year 2025. And just like the past, it is expected that FinTechs will continue to spearhead the technical advancements in AI. The AI Fintech market stood at $7.27 billion in 2019 and it is expected to grow to $35.40 billion by 2025.
It is highly anticipated that by the next 5 years, Chatbots will become more sophisticated and reliable for customer interaction, with the ability to handle more complex queries without human intervention. As per Lauren Foye banks should be able to automate 90% of their customers by chatbots by as early as 2022.
In recent years, personal voice assistants like Alexa, Google Home have become a popular household things. Not only these voice assistants have become smarter, but there has also been a surge of various useful skill integrations by the developers. Currently, Alexa has skill integration only for PayPal and very few banks for checking balances and making transactions. In the near future, it would not be surprising to see more banks integrating their banking skills with these voice assistants for basics and advanced commands in coming days
Banks will also continue their pursuit of reducing their operation overheads at every corner possible and will invest in AI-based automation in their day to day work. For example, there would be more focus to reduce the time required for processing back-office manual paperwork with the help of more sophisticated and accurate OCR systems that can also read regional languages. On the other hand, there would be innovative attempts to onboard new customers as fast as possible by minimizing the time and effort required for their KYC. European bank Banco Bilbao Vizcaya Argentaria (BBVA) has simplified the KYC process to the extent that customers can send selfie photo or video to open their account. We can expect more banks to jump on the bandwagon of similar AI-based innovations for automating the KYC process.
ATMs are also going to become smarter and secure thanks to IoT and Artificial Intelligence in the coming time. Expect these smart ATMs to authenticate you biometrically either by facial recognition, fingerprint scan, or retina scan. For better security, the surveillance would be equipped with smart computer vision cameras that can detect and alert authority for any suspicious activities. And for better service, thanks to IoT data, any possible breakdown could be predicted in advance using AI for proactive maintenance. There do exist few banks that have some or most of these futuristic features in their ATMs, but we can expect these smart ATMs to become more prevalent in the next 5 years.
It may sound contradicting but we are also witnessing the start of the demise of ATMs over the next decade or so with the rise of cashless economy and digital currency. And not only ATMs but even the once-popular plastic credit cards are on their way to extinction. The smartphone will be the one-stop solution of all your banking needs that will hold your digital/virtual currency and virtual credit cards in the digital wallet apps. And with the intersection of AR/VR and computer vision, the banking apps are going to become a delight for user experience. But all these new avenues of mobile banking will also pose its own security problems. To combat these, we will see more AI-based authentication and security measures inside these mobile banking apps.
One of the most exciting prospects that we can see in the coming years is the convergence of blockchain and artificial intelligence on a grand scale across all banking platforms. Blockchain is another emerging technology that offers a secured distributed transaction based on business rules coded as smart contracts. It is very possible to implement AI solutions in smart contracts and make the blockchain network more intelligent and secure.
In this digital world, the banks of 2025 will have to transform itself from being just a mere bank to become a technology company that offers banking services. They will have to adopt AI not just as an enabler of their functions but as a core strategy that defines their brand and services. And without a doubt, we also need to keep a watch at enthusiast Fintech startups as to what innovative adoption of AI they might come up with next in the near future that we never thought of earlier.
Disclaimer: The author of this text, Robin Trehan, has an undergraduate degree in Economics, Masters in international business and finance, and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries, and/or employees.
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