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How Automation is Transforming Banking – and What’s Next

Disruption. That’s the term used to describe the technology altering the way businesses operate, and the banking world is no exception. Automation has already long been at work changing how banks and credit unions operate, and that’s because it’s hard to deny the benefits. Automated banking features improve the bottom line by generating efficiencies, reducing error rates, improving competitive advantage and protecting institutions against that age-old banking nemesis, criminality. Recently, pressured to reduce physical contact in the post-COVID 19 world, such automation has only accelerated. 

Does Banking Automation Sacrifice the Human Connection?

So meanwhile, what’s happening to the human element? Community and regional banks can in fact adopt new technology without sacrificing that human connection. Consider that data analytics provide and empower your financial institution with a total picture of each customer, rather than the generic version formerly relied upon. This allows you to customize their experiences in more meaningful ways. 

And despite popular assumptions, technology does not have to act as a replacement for human conversations. In fact, it can make them more accessible. While AI is not quite at the stage where it can answer complicated customer questions on its own, you can integrate the ability to connect with consumers virtually to provide that personalized advice directly in your digital platform. Strategic conversations with human representatives are still incredibly valuable. Humans and technology can thrive together.

The State of Automation, Data Analytics and AI in Banking Today

In the modern world, big data rules. In banking, huge amounts of data are gathered daily from mobile banking apps, digital banking portals, payment processors and the high tech of yesteryear known as ATMs. These analytics allow banks and credit unions to make more informed decisions while minimizing risk. While not long ago, processing speeds and data storage posed a limit on analytic efficacy, that is no longer the case. Patterns and trends are identified rapidly, making it possible for banks to view the bigger picture immediately. 

For instance, data analytics support intricate user behavioral profiles, transforming sales and marketing. Marketing teams can tailor campaigns to specific demographics. Sales teams benefit from the high-lead qualification as well as the opportunity for more effective cross-selling. In an even more direct customer-service fashion, should unusual activity take place in an account, it’s flagged, you can promptly send a verification notice to your users, and that is big data analytics at work.  

Throw in new artificial intelligence technologies that can integrate with your platform, and data analytics become even more powerful. While banks and credit unions originally turned to AI for user experience enhancement, AI in banking now impacts virtually every aspect of the industry. For example:

  • Providing financial advice based on user profiles
  • Preventing security breaches by tracking down suspicious emails and boosting cybersecurity activities
  • Allowing external device and system monitoring
  • Detecting fraud including credit card fraud, payment fraud, identity theft and money laundering
  • Handwriting recognition
  • Adding efficiency to human resources and workforce management
  • Empowering digital conversations through chatbots, natural language processing, speech recognition and translation
  • Offering relevant products and experiences based on an in-depth understanding of an individual user’s past behavior and current needs  
  • Improving compliance by ensuring that all actions adhere to regulations. Smaller banks and credit unions once had to do a lot of time-consuming manual cross-checking to assure compliance, but AI streamlines the process.

AI can also make the lending process fairer. The historical biases against certain applicants are mitigated by models designed to remove such biases and make lending more objective. It’s just one more example of how technology can help improve financial inclusion. 

What to Expect From Here Out

Some of what you can expect in the future of banking automation is already here in a limited capacity. Robotic Processing Automation (RPA) will continue to have an increasing impact on all financial services. A combination of AI and robotic automation, RPA automates the tasks formerly performed by people. RPAs work at a rate of speed and level of accuracy humans cannot match (and shouldn’t have to!). That means employees no longer need to work on mundane, repetitive tasks, but can instead take on more complex initiatives that drive your institution forward. Banks are also increasingly using biometric facial recognition technology for authentication services, account onboarding and fraud prevention.

At Lumin Digital, we can customize your platform with human connection in mind, meanwhile helping you innovate and improve your business operations. Automation and technology give your institution the ability to deliver custom experiences to your users based on their individual needs. Request a demo and find out how we can help your credit union or bank thrive in an age of technological change.

Banking Journal – Data Analytics Can Help Banks Gain Market Share While Minimizing Risks
American Banker – AI in banking: Where it works and where it doesn’t
HBR – AI Can Make Bank Loans More Fair
International Banker – The Impact of Robotic Process Automation on Financial Services