How Artificial Intelligence is driving growth in the BFSI sector
Artificial Intelligence has been at the center of the technological revolution in the majority of industries. It has helped in enhancing business processes and improving work efficiency across all sectors. While not an exception, the BFSI sector has been comparatively “change-resistant” which has seen some rate of tech adoption in the past two decades. Artificial Intelligence (AI) has been a huge changemaker in the sector. The global market for AI in the BFSI sector was valued at USD$17.8 Billion in 2018 and is expected to reach USD$247 Billion by 2026 (Allied Market Research). Moreover, with the Government mobilizing the adoption of FinTech with initiatives like Jan Dhan Yojana, UPI, BharatNet mission which is driving internet adoption across India, the BFSI sector is gradually opening up to innovative solutions to modernize the banking system.
However, the major challenge faced by the sector in faster adoption of AI has been a lack of understanding of the application, sustainability and feasibility of the technology. So, today, I want to deep-dive into the benefits that early adopters are experiencing and the opportunities that are still left unexplored.
Relevant and Personalised Customer Engagement
With BFSI, customer engagement has always been a challenge. In the age of social media and digital conversations, customers are looking for swift and convenient services. Hence, traditional banking experience no longer serves the purpose of building awareness, creating connections or maintaining loyalty. Conversational AI-powered virtual assistants have turned the tide by enabling the delivery of personalized, relevant and real-time customer service. Consumers find it more convenient to say “hello” to a digital assistant rather than to dial the service helpline and stay on call for a long time. Personalized service and query resolution happen at a quicker pace and with zero human intervention with these AI-powered virtual assistants that leverage Natural Language Processing (NLP) enabling banks to increase their customer satisfaction and retention rates. As per a Global Market Insights report, customer service was the dominating application of artificial intelligence in the BFSI market with over 45 per cent share in the revenue in 2017! Imagine the demand and growth potential it holds in today’s scenario.
It has also enabled institutions to witness increased lead generation, cross-sales and up-sales. Machine learning-based analysis and distillation of data, both transactional and behavioural, gathered via account data and automated conversations enables customized and targeted advertising and re-engagement campaigns. State Bank of India’s Conversational AI campaign to build deep and natural language engagement and drive user acquisition resulted in generating an engagement rate of 61.6% across SBI apps via drip message re-engagement. As an Indian multinational, public sector banking and financial services statutory body in India, SBI was able to drive 1lakh+ adoption of its multiple digital assets with Conversational AI-driven virtual branded assistant.
A cost-effective way of doing business; boosts employee productivity
With Conversational AI, banks have been able to dramatically optimize costs and leverage human bandwidth for critical tasks. With the pandemic, even onboarding processes have been automated, significantly reducing customer visits to the bank and hence optimizing human resources and costs. A report by Business Insider Intelligence titled AI in Banking and Payments revealed that aggregate potential cost savings for banks from AI applications is estimated at $447 billion by 2023.
Solving for the erstwhile complications of Banking Frauds
A major benefit of deploying AI in BFSI has been tackling banking frauds with much more precision. In the last decade, banking frauds have become more sophisticated and difficult to track. According to a report by RBI, the percentage of bank frauds in India increased by 159% in 2019-20 and these account for about INR 1.48 lakh crore. This severely impacts a bank’s reputation in turn impacting customer loyalty. With AI and ML detecting frauds as well as predicting patterns and raising red-flags has become more successful. Machine Learning enables banks to go through large volumes of data and pin-point abnormal behaviour that can range from fraudulent transactions, ID forgery, loan scams to email phishing, identity theft and more. AI technologies enable reviewing of fund-flows, customer history, transaction history and behavioural analytics, credit scores and more which traditional human processes fail to detect.
The Future of BFSI is already here...
Artificial Intelligence has empowered BFSI enterprises to build a smooth digital journey across the customer lifecycle by automating processes and workforce. This has also drastically reduced cyber risks and enabled increased customer retention. Big data analytics will play a key role in redefining banking in India. As per Nasscom, the industry in India is expected to reach USD$16 billion by 2025. Innovation and customer-centric approach will call for increased deployment of data analytics in the sector enabling more personalized experiences and transformational customer journeys.
Source: BW Communities