Use Cases of Artificial Intelligence in Commercial Banking

In a previous couple of articles, we have already seen how artificial intelligence is useful in the field of commercial banking. We have also seen the various advantages and disadvantages of deploying artificial intelligence in commercial banking lending. However, it needs to be understood that lending is not the only department in commercial banking that will be impacted by the use of artificial intelligence. The impact of artificial intelligence is expected to be wide and is likely to impact several other departments as well.

In this article, we will have a look at areas where artificial intelligence is used in various departments within a commercial bank.

  1. Customer Service Robots: Artificial intelligence has started revolutionizing the field of customer service when it comes to commercial banking. Customer service has traditionally been a human-intensive, expensive, and difficult to manage department for any commercial bank. However, with the advent of artificial intelligence, this has changed.

    Commercial banks have studied the various patterns which exist in the field of commercial banking. Based on these patterns, they have used artificial intelligence to create software that can assist the customer and provide the same level of customer service as a human. The idea is to automate basic customer service tasks and deploy the services of humans only for the more difficult ones. Hence, over the next few years, artificial intelligence is likely to find large-scale applications in this department of commercial banks.

  2. Process Automation: The middle offices, as well as the back offices of commercial banks, are filled with mundane and repetitive processes which need to be undertaken. For instance, processes like check clearing and reconciliation are pretty straightforward and can be automated with the help of artificial intelligence.

    Over the years, technology has developed further and even more complex processes can now be automated. Most commercial banks have annual targets to increase the level of automation in their processes. This is the reason that commercial banks will heavily deploy artificial intelligence and related technologies in this domain.

  3. Pre-Approved Cross-Selling: Artificial intelligence has the ability to streamline the cross-selling process. Right now, the cross-selling process is a process with a very low hit rate and very large overheads. A lot of humans have to be employed to continually pitch the bank’s services to the customers. The conversion rate of this process is very less and hence the process is expensive.

    In the future, commercial banks are likely to spend a lot of money in order to incorporate artificial intelligence into cross-selling and automate the process. The bank’s system will study customer patterns and based on their behavior will select the bank’s products that can add more value to the customers. This system will be linked to the lending system as well and will make pre-approved offers to the customer which they will be able to avail at the click of a button. These features have already been introduced in personal banking. However, their large-scale deployment in commercial banking has not yet taken place.

  4. Reduce Frauds: Artificial intelligence-based systems are able to crunch data at a very fast speed. This means that they are able to quickly discern the normal operating pattern of a corporate and differentiate it from a fraudulent pattern.

    Commercial banks are likely to invest heavily in artificial intelligence-based technology so that they are able to provide better security to their customers.

    For instance, commercial banks can detect transactions that are initiated from computers located in different locations as compared to the ones which are normally used by the company. Also, commercial banks can use artificial intelligence to find better ways to confirm the identity of the customer before transactions are processed.

  5. Predictive Analytics: Commercial banks have decided to go beyond the traditional definition of vendors. They now want to become business partners for their corporations. One way to do so is by providing useful financial advice to their customers.

    Corporations generally share payments and receipts data with their banks. Hence, banks are aware of the cash flow situation of a corporation.

    Banks that use artificial intelligence can compare this cash flow situation to similar cash flow situations faced by other customers in the past and the financial vulnerabilities that they were exposed to. This helps them provide meaningful advice to their clients. This advisory service could prove to be a new source of revenue for commercial banks.

  6. Spend Analytics: Lastly, commercial banks can also help their customer corporations to maintain closer control over their spending. They can do so by using artificial intelligence to monitor the spending pattern of the corporation and by drawing reports which provide details about the ways in which expenditures have been incurred and the steps that can be taken to optimize these expenses. Many corporations find such reports to be extremely valuable since it helps draw their attention to the areas in their organization that need optimization.

The bottom line is that the field of artificial intelligence is going to have a deep impact on the commercial banking industry. Its impact will not be limited to a particular vertical or department of commercial banks. Instead, it is likely to transform the way in which commercial banking functions as a whole.

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Commercial Banking