In the past, commercial banks mostly relied on face-to-face operations — customers visited their local banks, printed out a ticket from the queue machine, and spoke with employees at the counter.
However, with the development of the Internet and the emergence of mobile-only banks, financial services are rapidly shifting to a non-face-to-face environment. With in-person services limited to areas where confidentiality is important, such as asset management or accommodations for the elderly, it is likely that virtual services will be at the center of commercial banking in the future.
The crux of virtual banking services will be understanding customers' needs, providing customer satisfaction, and ensuring that banking services are just as efficient online as in-person. Here, commercial banks' usage of generative AI such as ChatGPT will be incredibly important. While generative AI was expected to change the banking scene in about a decade in the past, that time has now been shortened to a year or so. If commercial banks do not adapt their business strategies swiftly under such circumstances, their competitiveness will inevitably decline.
Before discussing how commercial banks may utilize generative AI to benefit their customers, it is important to understand what their needs are. From the average customer's perspective, generative AI must not only be safe and reliable, but also accurate. Customers today trust banks to maintain their checking accounts, credit cards, investments, and much more. Thus, security becomes a primary concern when generative AI starts to handle sensitive personal information.
In addition, in the process of generative AI learning vast amounts of internal business data, commercial banks must take special care not to leak this information to competitors or to the public. As such, throughout the entire process of commercial banks shifting their financial services to the virtual sphere, it must be made clear that banks will employ skilled personnel, transparency, and good ethics.
Understanding this, how can banks benefit customers amid the full-fledged launch of AI?
Firstly, for individual customers, banks can use generative AI to enhance their customer service. Generative AI such as ChatGPT constantly receives large amounts of data and human feedback, using the patterns it learns to improve future responses. Thanks to this advanced language model, generative AI can answer questions more effectively, naturally, and personally than regular chatbots, creating the impression that the customer is talking to a real human.
Generative AI can also provide rapid and accurate translation services, meeting the demands of international customers who are not fluent in their bank's primary language. By applying generative AI to financial services for individual customers, commercial banks can receive large amounts of customer feedback, improve their AI responses accordingly, and increase customer satisfaction for more stakeholders at the end of the day.
Secondly, generative AI can also provide a wide range of services for business-to-business (B2B) and business-to-consumer (B2C) customers. For B2B customers, generative AI can help with business transactions and finding data patterns for a wide range of topics. For example, business customers can obtain AI-powered information on how well the company is operating, market trends, and customer behavior.
Generative AI can also help B2C customers lower risks and achieve their business goals. For instance, commercial banks can use AI-powered fraud detection systems to protect their B2C clients from false payments and unauthorized transactions. Commercial banks could also collaborate with B2C companies such as Netflix and Uber to manage customer payments and rewards programs, making sure that payments are processed quickly and repeat business is encouraged. By helping businesses buy, sell, and trade goods, commercial banks can lock in customer loyalty and maintain a high brand reputation.
Lastly, commercial banks can use generative AI to speed up loan approval and offer personalized financial advice, drastically improving the quality of customers' lives. By analyzing a customer's financial history within seconds, generative AI can help banks process loan applications much faster than in-person services. This can be especially useful for customers who need loans for important and time-sensitive purposes, such as buying a home or paying hospital bills.
In addition, after analyzing each customer's unique financial situation, generative AI can make personalized recommendations on how to save and invest money. Because generative AI is available 24/7, customers no longer have to make appointments or travel to their banks, which makes services more accessible, cost-effective, and helpful in rapidly changing financial markets. By helping customers quickly solve urgent problems and protect their wealth, commercial banks can provide significantly more convenience than in-person services.
In conclusion, by utilizing generative AI, banks can benefit customers by providing high-quality customer service, helping businesses make informed decisions, and improving accessibility for all. By identifying and tapping the potential of generative AI, commercial banks will be able to revolutionize the financial services industry.
Jung So-jin is a student at Yonsei University.