How will generative AI change core banking technology?

Generative AI is widely forecast to be the “next big thing” in just about every industry. How transformative it will be is yet to be seen, but for core banking there are already a number of important use cases.

Generative AI is widely forecast to be the “next big thing” in just about every industry. How transformative it will be is yet to be seen, but for core banking there are already a number of important use cases.

How firms choose to integrate generative AI will determine how they operate in the financial landscape of the future. By using it smartly and effectively, organisations can gain a serious edge over peers that are slower to adopt it.

But how could they use it? Here are four areas in which AI may become commonplace over the coming months and years.

Intelligent credit scoring.

Accurately credit scoring potential loan customers is a major challenge, particularly in countries where the typical borrower lacks traditional financial records. Limited data means greater exposure to risk, but it also makes it more difficult to expand your business.

Generative AI can step in by using vast amounts of data to build up a more accurate picture of a client’s creditworthiness using alternative data sources, such as transaction history or informal salary payments.

AI can be used to provide a running analysis of a client’s financial history by learning to identify potential areas of risk and uncertainty.

Better customer engagement.

When it comes to generating a more personalised, tailored customer experience, AI is a potential gamechanger.

AI can be used to analyse and learn from the enormous quantity of data collected across the customer journey. In doing so, it can learn how to tailor an experience to an individual’s exact needs, helping you target marketing campaigns and financial advice directly to clients.

By analysing information about trends, habits, and client needs, you can also direct relevant product recommendations, raising the likelihood of a new sale.

AI is also a boon to customer service. Chatbots are becoming commonplace across the financial services sector, but AI can take them to the next level by generating extremely helpful, timely answers in a form useful to the user. This, in turn, produces faster response times and more relevant help and advice.

Effective fraud detection.

AI’s capacity to learn means it can more effectively identify and discover new vectors for fraud and criminal activity. It can analyse large datasets to detect anomalies and inconsistencies, flagging them so staff can rapidly respond and reduce their firm’s exposure to risk. This, in turn, allows firms to minimise losses and maintain customer confidence.

Improved productivity.

AI has the potential to improve productivity across the board. McKinsey predicts it has the potential to automate between 60 and 70 per cent of employees’ work activities, speeding up processes and giving staff the opportunity to focus on other areas of the business.

We’ve discussed how steps in the lending cycle and in customer service can be improved using AI, but the benefits to productivity don’t stop there.

Generative AI’s biggest impact may simply be freeing up employees’ time, so they can concentrate on developing new products and services, meeting clients, attending conferences, creating marketing strategies, collecting in-person repayments, and so on.

By processing extremely large amounts of data and performing real-time analytics, AI can provide staff with the information they need to perform their work much more efficiently than ever before.

The right partner.

Unlocking the benefits of AI requires a dependable tech partner, and a flexible, scalable, and extensible core system that allows you to seamlessly integrate AI-driven tools.

To find out what makes Oradian that partner, get in touch with us today.

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