How Blockchain, Chatbots and AI Could Affect Banking UX Design in 2018
January 24, 2018
Artificial intelligence (AI), Chatbots and Blockchain are some of the key technologies which will disrupt the financial services industry in the coming days.
AI is a collection of machine learning, natural language processing, and cognitive computing designed for scale. This scalability is exciting, as it can create exponential growth and deliver today’s required personalized communications.
Blockchain is a public ledger for all cryptocurrencies including bitcoin. In Blockchain, a block records some or all recent transactions. Once these transactions are successfully completed, they are registered into a permanent database, which is termed as Blockchain. For every block, a cryptographic hash is generated that’s responsible for maintaining the integrity of data and transaction.
The Digital Evolution of Financial Services
Digital technologies like blockchain, AI, and chatbots, could act as saviors for the financial services industry. Financial services are rapidly becoming a technology-driven sector, which is evident by the amount of money they are spending on buying software.
IDC expects this figure to grow more than five percent over 2016’s spending
The forecast of $2.7 trillion in worldwide IT spending by 2020 is led by the financial services industry.
Banks and financial services firms can either build the chatbot app themselves or partner with FinTech to do so.
Potential impacts of financial services’ digital evolution include:
Artificial Intelligence will Empower Fintech Solutions
AI has huge potential to harness almost every sector with its benefits including Fintech. By automating various tasks in banks and other financial institutions, AI will make humans free for more efficient and productive tasks.
“30% of large financial institutions are investing in Artificial Intelligence (AI), according to the Global Fintech Report 2017 issued by PWC.”
Providing the best of customer service is every bank’s target today. And thus onboarding and a know-your-customer process are on the priority list. In this context, smart chatbots (one of the applications of AI) could be set for interacting with the customers, addressing to their queries, or even conduct financial transactions. In the future banking institutions will use AI for UX Design app development.
Some of the best use cases for chatbots are as follows :
1) Chatbots provide quick answers to clients, leading to happy customers.
2) Bots help to monitor the actions taken during financial transactions like swiping a card, withdrawal of money, payments, etc.This keeps the customers informed about the activities in their bank accounts and prevents incidences of frauds and malpractices.
3) Bots can function as marketing tools. They push the services and products that the banks offer to the customers who may not be aware that such services exist.
4) Bots also help in gathering and collecting information. Banks can use this information to make more focused campaigns and to increase their business.
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Fintech Solutions will Ride the Blockchain Wave
“According to PWC Fintech report 2017, nearly 77% of financial services companies are expected to adopt Blockchain as a part of in-production system.”
By 2020, the banking industry will derive $1B of business value from the use of blockchain-based cryptocurrencies.We all know that more and more cryptocurrencies are getting legalized and today there are more than 900 cryptocurrencies on the market. The endorsement of cryptocurrencies by banking industry could open doors to other industries.
The following benefits of blockchain are making it popular not just among the financial institutions, but across many sectors:
1) Distributed ledger: Blockchain involves a public ledger which is available to all parties involved in the transaction. This means that the moment any transaction is completed, it is entered into blockchain in blocks and a copy of the same is available to all the parties involved.
2) Minimize role of intermediaries (central authority/third party): Since blockchain works on the principle of peer-to-peer transactions, the role of any intermediary (central authority or clearing house) is minimized, resulting in faster and smooth transaction processing.
3) Reduced transaction cost: Blockchain is built on the concept of sharing information and building a consensus among all the involved parties, which helps save on reconciliation costs between banks and losses because of documentary frauds.
4) Traceability of transaction: Blockchain has the capability to trace the entire chain for a particular transaction which helps control fraud and black money.
5) KYC and AML process: Banks can use blockchain to maintain KYC details of customers, which can be leveraged across different lines of business within the bank along with ensuring compliance of AML.
6)Trade Finance: Blockchain has huge potential in a trade finance transaction encompassing entire supply chain which involves parties like importer, exporter, importer and exporter banks, customs, shipping line, freight forwarder, and insurer.
7) Commercial lending and syndicated loans: Commercial lending involves a lot of document exchange between customer, bank and enabling parties like lawyers and valuation firms. During loan processing, various departments in the bank also need to access these documents which involves front, mid and back office along with legal and compliance.
Through blockchain, this entire process can be managed efficiently and effectively, streamlining loan document processing.
The Future of Fintech
A lot of legislative changes are encouraging Fintech app development. In Europe, the Payment Service Directive (PSD2), is expected to be in force at the beginning of 2018. It will allow clients to authorize the access of third parties to their bank accounts for payments. This will lead to a universal compliance standard, secure payments and more data available to clients.
Similarly, the financial sector is plagued by delays in clearance and settlement. Blockchain technology is supposed to solve this concern and increase the transaction speed.
There is a clear advancement towards using more technology in the financial sector not only to increase productivity but to create a more personal relationship with the customer, more lucrative portfolios, and even a decentralized money system. Yet, we are still far away from the day when finance professionals and related people will be out of their jobs. Right now, AI and blockchain technologies are at the budding stage and are expected to give a major boost to the financial industry in the coming years.