Thu. Jul 25th, 2024
AI revolution

Ovik Mkrtchyan, a respected innovator, entrepreneur, and special business projects developer, who’s currently a corporate consultant at Gor Investment Limited, is a strong advocator of artificial intelligence in fintech.

Traditional banks have, for a long time, enjoyed a financial monopoly across the planet. Old style banking is on its way out and becoming rapidly in vogue as the new wave of financial technology sweeps the whole of the financial services industry in 2022. At the heart of it all is artificial intelligence – AI – and one of its greatest proponents, Ovik Mkrtchyan, sees it as an inevitable step towards enhanced services to clients and increased profits. AI is already stimulating those engaged in the financial arena to achieve substantial gains in terms of personalised customer facilities, business planning and of course more stringent security processes.

Artificial Intelligence in banking sector

Ovik Mkrtchyan recognises that banking today is by necessity made up of three sections – in prime place are the overall management activities: strategic planning, developing and promoting new customer lines, publicity and marketing, extending the bank branch system, regularly assessing wealth creation approaches, funding, quality control to customers and of course staff.

Within this first section, AI is increasingly playing its part in things like client credit scoring, predicting trends and growth, customer categorisation, AI-generated automatic customer calling, determining volume use at cash dispensers, and the compilation of data.

The second section comprises undertakings in the main banking operation and includes services to clients both retail and corporate, working intimately with other financial entities, as well as daily perceptions and changes within the finance, derivatives, and stock markets. Handling many of these AI solutions are chatbots – verbal assistants for ID purposes, as well as a whole range of personalised digital facilities for clients, thus enhancing customer relations and saving huge amounts of staff time and effort. Saving money in effect.

On to the third section of the banking operation framework and Ovik Mkrtchyan in his analysis identifies all the other supporting activities – things like Automated Clearing Systems, legal and IT control, accounts management and documentation, security in its many forms, and of course an area which has become of huge concern to all financial organisations – so preventing money laundering and the funding of terrorist activities.

In this third section, AI now is extensively being employed for biometric identification, authenticating documents, preventing fraud plus all the detection work involved in financial activity. In Ovik Mkrtchyan’s opinion, AI being introduced into banking systems not only has a positive effect on improving services to customers but also significantly improves current business processes related to assessing credit risks, combating fraud, and demand forecasting.

He explains: “We can already see that the use of innovative scoring models based on machine learning algorithms helps to reduce the default rate and allows operating costs to be reduced more easily. It really opens up new opportunities for companies by increasing their dividends, stimulates additional sales of the latest customer lines created using AI, and reduces client turnover.”

Smart call channelling is another cost-saving operation. Fast customer connection enabled by voice assistant software, overseen by AI technology, can cope with four-fifths of all calls made to the bank and then process at least a tenth of these with the correct automatic replies, so cutting down the customer response time by an average of 40 seconds. It also keeps the customer happy – he doesn’t have to wait long for his query to be dealt with and if it’s so complex the automated assistant can’t come up with all the answers, his call is transferred to the relevant bank employee who is able to handle the query.

Smart chatbots which use voice recognition techniques are another great example of the benefits of AI. At the moment, up to 60% of requests from bank customers are handled automatically by chatbots, dealing with queries and acting on them four times faster than conventional call and queue times.

Human decision-making vs AI

But do understand that AI adds to human decision-making, it’s not a substitute. Its prime role is to give more valuable information that can help professionals in finance and banking make much better evaluations when it comes to lending. Algorithms can handle huge amounts of data on a level that one human being, no matter how intelligent, just cannot hope to equal. However, they don’t have the same grasp and nuance of markets, and indeed human characteristics, as people possess, and that’s why they need to be augmented.

Algorithms have a firm set of rules that just don’t take in emotional responses to sudden market trends, or anything else that might alarm or enthuse humans. Some algorithms reveal what is known as ‘momentum’ – identifying significant market moves before speculating that it will take a while before the proverbial ‘wave’ breaks. It allows for correct positioning, waiting until another mathematical indicator comes along and signals that the wave is about to make a splash.

There, new and surprising data sources are brought into the equation. But data acquisition can go beyond the financial arena. There may be relationships – even if of a weak nature – say, between comments on social media and stock prices. Algorithms can be employed to distinguish patterns and connections in separate sets of data thereby giving a good idea of the directions in which the markets might move. Such indicators are then grasped and propelled into proposals for potential trade opportunities, aimed at those who can activate them in real-time in the marketplace.

Ovik Mkrtchyan’s opinion 

In Ovik Mkrtchyan’s opinion, the use of artificial intelligence in the modern banking industry is here to stay. “It’s one of the main factors in the digital finance world that stands to substantially boost future financial markets. What’s more, all-important customer service is being enriched considerably. Customer service was of course one of the first to be automated in banking, improving all-round communication while at the same time enabling the degree of customer satisfaction to be monitored. When the customer is happy his loyalty endures and this becomes the prime generator of growth in the banking business.”

The upshot is, he says, that all organisations in the finance industry should keep their eye on the ball and continue to develop their business processes and practices aided by fintech. Put simply, staying abreast of the new technologies available is a sure recipe for success.

By Manali