Artificial Intelligence-based tools have the potential to deliver revolutionary features to banks. One of the key benefits of adopting AI-based tools in banking is the automation and streamlining of their risk and compliance processes. As a result, banks are becoming increasingly reliant and implementing this technology to improve not only their overall productivity and output but also deliver a better experience to their customers.
Here are some key benefits of using AI-based applications for risk and compliance automation for banks:
Faster and better risks assessments
Using AI in banking automation makes it possible to run a detailed and comprehensive analysis of all types of risks. For example, these solutions will cover all aspects like consumption habits, banking history, behavioral patterns etc. when considering credit risks. Basically, it allows banks to improve exponentially their ability to add variables to analyze and process them quickly.
This means banks can process an in-depth analysis of all kinds of risks. Risk management solutions are able to analyze more variables at the same time while taking into consideration factors like the country’s political and financial landscape, news and other related market movements to output predictive analytics that will enable banks to anticipate risks and mitigate them preemptively.
Efficiency in combating compliance violations
Machine learning applications can analyze real-time transactions to detect any violations and provide alerts in suspicious situations, especially when assessing patterns in the company’s database. Banks have the ability to instantly know if an account executive has not collected or received all the necessary documentation. This audit trail of documentation also acts as a counter against fraud and other compliance-related issues. Each action undertaken by employees with regards to risk and compliance documentation is monitored by the system which allows banks to detect anomalies and quickly find the source of the problem.
This streamlines regulatory inspections as well. Banks can improve their risk and compliance frameworks by automatically generating reports and streamlining the flow of risk assessment instead of dedicating resources to create extensive reports. They also allow banks to provide detailed and exhaustive audit trails to regulatory bodies, reducing the time required for mandatory examinations.
Manual risk assessment and compliance need extensive human labor. Also, risk and compliance are two specialized fields that require expert and experienced personnel. Often, banks resort to limiting the risk and compliance capabilities due to the cost of expanding the risk and compliance teams to not be sustainable for the bank’s bottom line. AI solutions are ideal in such cases as they have the ability to augment a bank’s risk and compliance teams, leading them to increase productivity exponentially.
Apart from reducing risks, AI also reduces the time taken to complete risk and compliance processes which result in reduced cost of operations. This leaves employees to dedicate more time to managerial and decisive duties. As a result, banks increase profitability and productivity while reducing costs as well as improving their methods of managing risk and compliance.
Benefits for customers
AI-based applications also result in several benefits for the customers of banks as well. By ensuring accurate and quick compliance, such solutions enable banks to provide faster and better service to their customers. Banking processes tend to take a lot of time due to the compliance and risk-related tasks they have to execute. Banks are required to ensure that each transaction and each account they open is adhering to the rules and regulations. This involves a lot of cross-checking, information access and collection, some of which are still performed manually in small banks.
Automation has the ability to perform banking processes rapidly and accurately to ensure that customers do not have to wait long for the transactions to get approved. Also, when risk and compliance testing is automated, users can gain access to more digital services.
Several payment platforms offer instant payments and transactions to customers while banking applications usually do not offer the same kind of functionality. The main reason is that such digital payment applications are not subject to the same rules and regulations as a bank and hence are not as liable. However, using AI technology, banks have the ability to cover this service gap and ensure that they deliver the functionality that their customers want.