Artificial Intelligence in the Banking World

Written by Di Princell

February 25, 2022

Not everything that is faced can be changed, but nothing can be changed until it is faced ~ James Baldwin

What do you get when you cross a wall unit with artificial intelligence . . . shelf-awareness?! It’s finally here, the age of machine learning, digital ecosystems, universal data, and artificial intelligence (AI), all combined to influence business results and accelerate cultural changes. AI is the link that transforms massive amounts of data into valuable insights for business.

Wikipedia defines AI as the “ability of a computer program or machine to think and learn.” Create&Learn for kids has simplified what AI does – – “AI enhances the speed, precision and effectiveness of human efforts.” Bingo!

So why do banks across the board have such difficult times adapting to new technologies? Be’eri Mart’s recent September article on Analyzing Bank Behavior shared his insights:  

  • “A recent McKinsey reportsays that global and regional banking leaders increasingly rely on digital ecosystems driven by artificial intelligence (AI) and analytical capabilities to inform their business processes. To that end, the main challenges banks face today stem from their inability to operationalize vast amounts of data and deploy advanced analytics.”
  • “Banks that successfully integrate advanced analytics and data operationalization into their technology infrastructure hold a significant competitive advantage over banks that rely on manual processes. Although transitioning to digital, data-driven systems can be challenging for banks, the benefits are tremendous – product personalization, faster pricing processes, enhanced risk management and more.”

Historically, banks have created bias loan systems built around inaccurate credit information, lack of data, manual mistakes, ineffective analysis, and discriminating practices, excluding a large segment of the population deemed not worthy of credit, all contributing to deficient product offerings. Implementing AI capabilities in a thoughtful, unbiased manner will reduce errors, customize products, increase speed, identify fraud, limit unfairness, automate data management, and most importantly, expand loans to a more inclusive population. Unfortunately, many banks are not equipped with the expertise to execute analytics driven solutions. In today’s high-powered world of technology, only addressing the business needs in the financial arena is a partial solution, however, having the technical knowledge to leverage AI as a means to the end is the critical missing piece.

RIBBIT, the bank behavior experts, uses AI as one of their deep digging tools, which has created the most insightful window into a consumer’s ability-to-pay for products and services. As more payments are paid through our bank accounts, consumers’ financial footprints will be reflected in their transaction information. The RIBBIT team of data analysts has cracked the risk assessment code, making sense out of the bank account data to analyze and predict future fiscal behavior based on current banking patterns. The insights garnered through AI give data scientists the ability to predict affordability with a high level of reliability and accuracy. The RIBBIT team claims the resulting probability score is more effective than the credit score however, when used together, the outcome is a more comprehensive assessment tool benefiting both lenders and consumers.

Adding AI to the risk formula creates diverse opportunities for banks and for the underserved so that accessibility and fairness can thrive, opening doors to a myriad of successful loans. No longer will affordability be underestimated.

Stay tuned . . .

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