Industrial robots are building cars in factories where human presence is redundant; autonomous unmanned vehicles are crawling on the surface of Mars; and self-driving is a few years away from becoming reality. We are at the cusp of a revolutionary change that will define the way we live in the future.
At the heart of this transformation is Artificial Intelligence (AI), a cognitive machine learning process that emulates the development of the human brain and which has started to disrupt industries from manufacturing and transport to agriculture and governance. AI’s domain spans beyond the borders of the industrial sector, into essential activities of our daily lives like banking and finance.
Whether it’s nutrition and diets or assets owned, in a strange way, banking transactions are the most accurate portrayal of a person’s lifestyle.
Every spend and remittance today leaves behind a digital footprint. They also paint an honest picture of how people plan to improve various aspects of their lifestyle.
With this treasure of digital footprint, banks can offer more than just banking services, including many more real-time contextual offering. The cognitive, all-knowing personal AI assistant can help you lead your life the way you want to — provide advisory on the personal financial front, get fit, optimise budgets and protect against frauds.
Built around data
It works on the principle of data collection and analysis. As digital banking includes e-commerce, opening accounts and securing loans through an easy-to-use mobile interface, the resultant data is more structured and its collection and analysis easier.
The best-in-class omni-channel commerce architecture provides the starting point to design the future.
Most financial institutions have built strong data sourcing, but subsequent steps remain under invested. It is important that different capabilities under data management like identity management, device identification, data transformation and data ingestion are also triggered.
Similarly, capabilities built for marketing automation, enterprise reporting, pricing and analytics is a must. Finally, a content management system that will help deliver real-time interaction.
Standard Chartered has begun rolling out digital banks in the region.
Since the launch of the first in Cote d’Ivoire in 2018, we launched eight digital banks in 15 months and will continue to roll out the next wave of digital solutions as demand for convenience banking that allows consumers to enjoy simple, secure, affordable and uninterrupted banking along with the option to participate in promotions and loyalty programmes is increasing.
Measuring digital banking’s true potential The potential is further enunciated by the fact that currently in sub-Saharan Africa alone, 155 million men and 194 million women are financially excluded. With 82 per cent of Africa having a mobile connection, the time is ripe for the introduction of digital banks to provide financial inclusion to millions.
The introduction of AI to digital banking could mean optimising personal finances and budgets. Lack of financial discipline is often cited as a larger problem than lack of money. It doesn’t matter how much money you make a month, if you lack financial discipline, you will always find yourself short of it.
The advent of a large-scale roll-out of digital banks facilitates AI’s data-driven analytics to use predictive technology to analyse spending habit and provide valuable information that can transform people’s lives. For instance, AI assistants can calculate the exact amount of disposable income left after paying off debts and instalments every month.
And coupling it with previous transactions done by the user, it can advise on best ways to use the savings. Like spending on more healthy products to achieve fitness goals or saving money for time-off during upcoming vacations.
AI can provide the personal touch
AI can also act as a personal wealth manager where it can help in making unbiased investment decisions based on objective, data-driven analytics to improve your share of wealth. It can help beta movement stock indices and offer recommendations along with associated risks.
Moreover, by understanding spending patterns and credit information, banks can assist users in building a customised investment plan. This removes the need for expensive personal finance managers whose exorbitant fees shadow potentials lucrative investment gains.
While digital banking is built for swift and secure transactions, its authorisation falling into the wrong hands can lead to a financial catastrophe.
As AI is designed to detect fraudulent transactions, any suspicious or out of the ordinary activity in an account can be flagged at once, securing the account and the funds inside it. With AI providing comprehensive solutions through digital banking, convenience and access to state-of-the-art services will be easier for users.
However, AI will still be used as an assistance tool and the human element for banking services will remain crucial.
While digital channels are undoubtedly more efficient, have lower error rates and a decreased cost-to-serve ratio, finding the balance between traditional and digital banking services is the key to providing exceptional customer service. Customers will always require an element of human interaction.
Jaydeep Gupta is Regional Head of Retail Banking, Africa and Middle East at Standard Chartered.