Times are changing fast, and the banking industry as a whole has reached a crossroads regarding the integrity of its systems while still keeping pace with modern-day consumers' expectations.
In an effort to improve the scale and efficiency of today’s financial services, organizations are relying more on transformative technologies like artificial intelligence (AI) and the Internet of Things (IoT). When used together, these industry-disrupting advancements are becoming a real game changer for all financial services organizations.
You Can Also Read: Pedal Power: How Bicycle-Themed Slots Create a Community of Cycling Enthusiasts
Understanding What AIoT Is
While many individuals and businesses may already be familiar with the concept of IoT, a new fusion of AI-enabled interconnected devices and sensors termed “AIoT” has been making waves in the market. Together, these technologies create a much more intelligent system of devices that can simultaneously analyze large amounts of information while automating certain processes.
For the financial services sector, this combination of technologies enables:
- Intelligent process automation
- More personalized financial services
- Safer security protocols
By making smart use of AIoT, financial institutions can discover a variety of new opportunities to provide their clients with experiences that far outweigh their competitors.
The Challenges Faced by Traditional Banking Systems
Traditional banking systems relied on the same software and client services for many years. However, as modern demands have changed, financial companies are increasingly being asked to modify their approach to customer interactions and the speed at which they meet their obligations to clients.
Some of the challenges they’re currently facing include:
Escalating Customer Dissatisfaction - Outdated banking practices lead to significant issues when servicing customers' financial needs. These can include limited access to necessary banking features outside of regular banking hours and a lack of personalized service.
Operational Inefficiencies - Most legacy banking systems rely on various manual processes to support client needs. This can be highly inflexible for customers and increase the costs of operating a banking institution.
Security Vulnerabilities - While outdated banking software and supporting infrastructure can tax the client experience, they also introduce several vulnerabilities in banking systems to outside security threats.
AIoT Applications in Financial Services
The continuous development of AIoT applications has given the financial services sector several opportunities to enhance client experiences. Not only do they help improve interactions between clients and their account management, but they also allow for the creation of much more comprehensive products and services.
Customer Experience Enhancements
The customer experience is critical in nearly every industry, especially when providing financial services to individuals. AIoT technologies are assisting financial institutions in improving client interactions and providing effective ways to introduce much more personalized services and recommendations.
Financial institutions are able to do this because of the powerful data analysis capabilities and processing power that AIoT provides. Smart chatbots and virtual assistants can now be equipped with industry-leading natural language processing capabilities. This technology has nearly limitless use cases, especially when supporting clients after banking hours.
Rather than simply providing customers with a knowledge base to explore independently, these smart assistants can use advanced automation and simulated intelligence to help customers find exactly what they’re looking for without needing to speak with a human representative.
Operational Efficiency Improvements
Financial organizations need to manage various processes day to day. Depending on how much staff they have on hand, any inefficiencies in these processes can be felt internally and externally when dealing with clients.
AIoT applications are designed to support various banking processes while optimizing workflows to create more streamlined banking activities. Advanced algorithms and the large datasets AIoT-powered technologies collect can successfully manage everything from credit scoring to fraud detection.
New Product and Service Opportunities
Financial service companies are constantly under pressure from emerging FinTech startups to innovate their offerings continuously. AIoT technologies allow them to incorporate everything from automated investment management services to AI-driven digital advisors that can help clients make smarter decisions about their financial portfolios.
For organizations that focus on providing insurance to their clients, AIoT is now playing an impactful role in reducing financial risks when managing claim assessments or determining levels of coverage. This helps insurers choose more appropriate policies and offer more competitive rates that can greatly impact client retention and long-term satisfaction.
Addressing Potential Concerns
Although AIoT continues to play a critical transformative role in modern-day financial services organizations, some potential concerns are associated with the full adoption of supporting technologies before they’re fully implemented.
Data Privacy and Security - Any time organizations use various tools and technologies to collect and store sensitive client information, the security question comes into view. Adopting AIoT solutions without adequate due diligence in this area can have many negative implications for organizations, including a breach of regulatory compliance laws.
Algorithmic Bias and Fairness - Since AIoT applications rely heavily on artificial intelligence algorithms, there is an increased chance that the information they provide is based on outdated historical data. This means that financial institutions need to ensure their systems are regularly audited to ensure their accuracy.
Job Displacement and Workforce Reskilling - Of course, with the advancements of newer automation technologies, there have been concerns over potential job losses in the financial sector. There needs to be more awareness when it comes to balancing the use of advanced technologies with ensuring the economic stability of workers in the industry.
Although there is still much to cover when it comes to the full-scale adoption of AIoT in the financial services sector, the future still looks bright for organizations willing to invest in more modern solutions for meeting their client’s needs.
Author Bio:
Subbu Seetharaman
Subbu Seetharaman is the Director Of Engineering, at Lantronix, a global provider of turnkey solutions and engineering services for the internet of things (IoT). Subbu is an engineering executive with over 25 years experience in leading software development teams, building geographically distributed, high performing teams involved in developing complex software products around programmable hardware devices.