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Updated by 11.23.2023
No Fakes Here: Financial Services’ Real Foray Into Artificial Intelligence
Once the stuff of science fiction, artificial intelligence (AI) is fast gaining ground in the financial services sector. According to a 2021 study published by the World Economic Forum and the Cambridge Centre for Alternative Finance at the University of Cambridge, Cambridge, UK, AI is considered a “crucial business driver”. Nearly two-thirds (64 percent) of financial entities queried for the study said they expect to be “mass adopters” of AI within two years, “proving the potential of AI to stimulate innovation and growth across a wide range of business functions”.
With this in mind, E-Complish explores how AI is being leveraged in the financial services industry.
AI improves fraud detection by allowing banks, credit unions, and other financial services players to comb through massive amounts of data in real-time to find information that points to suspicious activity and confirm or refute it. In addition to helping financial industry players minimize the incidence of fraud, AI in this context reduces the number of false positives generated by fraud detection systems. In turn, it saves time and labor that would otherwise be expended to investigate fraud alerts and assist customers who are attempting to complete legitimate transactions.
AI also decreases the likelihood of upsetting and potentially losing customers, who can easily become frustrated when they suddenly find themselves prohibited from making a payment with a credit or debit card. Here’s an example: Customer A lives in New York City and has no history of using a credit card abroad and attempts to make a hefty purchase in Paris. Traditional fraud detection technology might immediately trigger a location-based fraud alert that would cut off the credit card right away.
By contrast, an AI-based method of fraud detection would likely pinpoint several other related events that have occurred in the previous few months, like the purchase of an airline ticket to Paris a few months before, followed by check-in to a Paris hotel a few days prior to the attempted transaction. Based on this “big picture” information, AI algorithms would automatically deem the attempted Paris transaction likely to be non-fraudulent.
What’s more, AI can play a part in detecting fraudulent activity that might otherwise go unnoticed. For instance, if Customer A’s credit card was used at a restaurant in New York City while she is checked into a hotel in Paris, an AI-based system may trigger a fraud alert even though a pattern of restaurant charges is typical of her spending pattern.
Financial entities harness AI in several ways when it comes to customer service. Many have implemented AI-powered solutions like voice recognition technology to handle telephone calls made to call centers. This allows them to easily respond to customer inquiries without depending on human call center agents saving time and reducing labor expenditures as well as satisfying ever-increasing consumer demand for speedy service. Some banks and credit unions utilize chatbots to provide customers with similar assistance.
In another vein, certain financial service players use voice recognition and sentiment detection technologies that utilize AI to evaluate the performance of human customer service representatives. These solutions can identify frustration, anger, and other emotions in customers’ voices and recommend appropriate actions that may diffuse situations and pave the way for increased customer satisfaction.
AI-enabled technology gives banks, credit unions, and other financial service entities the ability to keep a finger on the pulse of consumer sentiment and reaction to news reports, social media coverage, and other trends. Through sentiment analysis, firms can monitor consumer-generated comments found in traditional media, social media, product reviews, and other online sources and analyze whether they are favorable or unfavorable. Real-time updates let institutions’ social media teams respond quickly to online feedback and initiate further intervention if needed before small problems escalate.
Compliance obligations limit the commitments, assertions, and information financial institutions’ representatives can convey to consumers. For this reason, some players now use AI-powered solutions to analyze the content of email messages, interpret voice conversations, read text messages, and evaluate other communications. This means potential compliance issues can be identified and handled before consumers receive such communications.
E-Complish provides a full range of payment processing solutions, including solutions for credit unions. Schedule a consultation and learn more about it.
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