AI is Changing Banking
Industry professionals weigh in
Thanks to RPA (robotic process automation) we’ve been able to reduce some of our onboarding processes from days to minutes, allowing our staff to provide greater focus on directly helping our clients with complex problems that need a personal touch.
Charles LeFevre, chief operations and client experience officer at Fidelity Bank LA
The term artificial intelligence has been synonymous with science fiction for decades, with the genre bringing all sorts of fantastical variations of AI to life. But today’s world has grown to see the term as more than an element of a book or movie. Now AI is becoming a part of everyday vocabulary through social media, marketing and the banking community.
With the digitalization of the world, AI’s transition into a buzz word was inevitable. In recent years, AI has turned into a growing force across the board, transforming how we live our lives in areas from shopping to banking.
While AI hasn’t quite yet taken over the banking sector, as the technology matures and becomes more affordable for smaller and midsize banks, the possibilities will become endless. Some of the ways banks have already implemented AI are through fraud prevention, unusual transactions, customer service and risk management.
Cybersecurity is answering some of our country’s biggest fears in the banking sector. Many industry insiders believe that AI is part of that answer.
Tom Czerniak, SVP of operations at Gulf Coast Bank and Trust, says the field of cybersecurity has exploded and there aren’t enough qualified people to fill the positions. This, he says, is where AI comes into play.
“[AI] is being used as a security tool and resource to help fill the needs,” he says. “It enhances security with intrusion detection/prevention systems, malware detections and fraud detection. AI plays a significant role in determining whether a transaction is valid, relative to customer, location, frequency, history, merchant and amount. Each transaction is scored and weighed against risk in a real-time scenario. Questionable transactions can be brought to customers’ attention via immediate texting to help to improve these AI models and not disrupt customer transactions.”
Czerniak says AI is also helping companies maintain higher levels of security through platforms that gather information from sources, such as the government, which is then input into databases that can search and detect specific attacks.
“AI increases those capabilities and has the potential to predict threats in advance,” he said. “We spend a lot of time and energy playing defense, but with AI we can play a little offense as well. This increases our overall security posture.”
Charles LeFevre, chief operations and client experience officer at Fidelity Bank LA, said his InfoSec team augments their review processes with AI, which looks for anomalous behavior at a deep level in order to automatically block potentially malicious activity.
According to LeFevre, Fidelity isn’t stopping there as the company continues to expand its capabilities in AI and other robotic processes in all areas.
“Whether it is AI, IA (intelligent assistance), or RPA (robotic process automation), using these tools have resulted in better experiences for our associates and our clients,” he said. “Thanks to RPA we’ve been able to reduce some of our onboarding processes from days to minutes, allowing our staff to provide greater focus on directly helping our clients with complex problems that need a personal touch. AI will continue to open doors that will help banks provide clients with fast solutions and recommendations that are tailored to their specific needs.”
ROI with AI
AI is one of the greatest innovations in recent years for customers when it comes to online banking. But the cost of the services is not viable for some small- to midsize financial firms to achieve a ROI.
Rafael Rondon, president and CEO of Xplore Federal Credit Union, is a proponent of AI due to its potential to increase efficiencies and more effective diversify assets and services.
But ultimately for Rondon, the cost and lack of competition amongst vendors, at this time, made the decision to integrate AI not financially viable. However, ROI was not the sole factor in his decision.
“Depending on the AI system being considered, implementation and set-up could be complex and require a significant portion of limited assets an organization has,” he said. “Programming the different behaviors and factors to be taken into account by the AI can be time consuming. Also, AI in most cases is a learning system that improves from each interaction and increases its effectiveness with greater number of interactions — this is great, but it also means that it could take some time before your AI system reaches peak efficiency and you may have subpar performance in the earlier stages when the system goes live.”
Rondon believes in the years to come AI will become more commonplace and have a more pronounced presence in everyday banking. He projects that in as little as three to five years the technology could become affordable for small and midsize banks, and effective enough in processing and anticipating the needs of customers.
“The social and economic environment is also fueling a rapid shift towards AI in the financial industry,” he added. “Organizations want to market themselves as forward thinking and most innovative [financial institutions] to attract younger clients and capture a larger segment of the market.”
Are we witnessing the beginning of a new era? Rondon predicts that soon the norm of banking will become clients interacting with AI at their financial institution instead of humans. But he believes that one of the biggest ways AI will change banking is through data mining.
“Organizations are using AI in more innovative and effective ways to mine data and identify behaviors that relate to current needs,” he said. “In the very near future, those same AI systems will be able to predict future client needs with an extreme high level of accuracy.
“Can you imagine receiving an offer for a home improvement loan on the day you decide you need to upgrade your kitchen or add a pool to your house? Soon that will be a reality because AI systems are learning and identifying what are the behaviors and activities you perform days, weeks and months prior to you making the decision to improve your home. The AI system that can more closely predict the date that you’ll make the decision to improve your home and seek financing to do so, will be the one that gets your business.”
AI plays a significant role in determining whether a transaction is valid, relative to customer, location, frequency, history, merchant and amount.
Tom Czerniak, SVP of operations at Gulf Coast Bank and Trust