In a recent McKinsey Report titled “Global Banking Annual Review 2023: The Great Banking Transition – Oct 2023”, McKinsey details 4 key transitions – and lists five priorities that can help banks capture the moment as they look to reinvent and future-proof themselves. The five are: exploiting leading technologies (including AI), flexing and potentially even unbundling the balance sheet, scaling or exiting transaction business, levelling up distribution, and adapting to the evolving risk landscape.
Let us focus on the first priority – exploiting leading technologies including AI. Broadly speaking AI can have a transformative impact on banking due to its two inherent capabilities
- Mimic human cognitive function like – text processing (reading), speech, image and video processing to perform complex automations
- Handle and process very large volumes of data at great speeds for gleaning insights, comprehension, match making and personalising services which is simply beyond human capacity
Banks & Financial Institutions can leverage both these facets of AI. Furthermore, GenAI has enhanced these capabilities manifold with the ability to create text, designs, images and even music and poetry, with very significant impact on marketing, customer services and software coding.
At the heart of banking today is to create a truly responsive services business. A recent study comparing banks with other services industry like hospitality, travel and healthcare shows that typical Net Promoter Scores (NPS) of Banks significantly lag other service industries illustrating the enormous scope of improving services.
Key to that service is empowerment. Empowerment of both customers and employees by having technology solutions that are intuitive, easy to use and genuinely powerful (able to integrate front office, middle office and back office, able to pull data from different silos and orchestrating action based on the data automatically).
AI (and Gen AI) bring value by interpreting voice commands or providing natural language interface. They provide value by quickly ingesting huge data and creating summaries that are easy to understand and act upon. Responses are automated so that human intervention is minimised but at the same time it is very human like.
Since expectations of banking service is still very human centric, the best option is to empower bank agents and employees with right information at right time and fast efficient applications at their fingertips to achieve more in less time. Happy customers and happy employees can only be good news for the Banks’ profitability and reputation.