THE FUTURE OF BANKING How AI Is Revolutionizing Operations BY BRANDON KOESER, Financial Services Senior Analyst, RSM, and ANGELA KRAMER, Financial Services Senior Analyst, RSM This article was originally published on RSMUS.com. Artificial intelligence tools such as ChatGPT — though many are still nascent — are rapidly shifting the landscape in numerous industries, including the financial institutions space. The hype around these technologies may have some organizations prepared to run full speed toward implementing them across the entire business, but four areas stand out as transformational opportunities for financial institutions. Loan application processing, compliance and risk management, fraud detection and customer service each tend to depend heavily on human capital. Stringent standards and increasing regulations for institutions mean individual employees often spend hours on repetitive tasks. AI will not only streamline those areas and create operational efficiencies but also help free up those employees to focus on higher-value responsibilities, which will further promote a successful organizational culture and aid employee retention. 1. Loan Application Processing AI can play an integral role in loan application processing, both internally at the bank and in customer-facing functions. Such tools can answer customers’ questions in the initial loan application stage and provide helpful guidance throughout the application process. During underwriting, AI can also add value by automating tedious tasks while underwriters address more nuanced aspects of the process. Given that the approval process is normally performed by various individuals, AI can also analyze predetermined key metrics to identify risk factors potentially overlooked by a human. 2. Compliance and Risk Management A significant area where institutions can leverage AI is compliance and risk management. To ensure that employees obtain a thorough understanding of the compliance requirements, laws and regulations governing financial institutions, AI can provide the proper training and education. Further, since most financial institutions follow a manual process to collect data and create regulatory reports, AI can help automate this process and provide report templates. Once an AI tool is trained to understand the data and the activity, it can identify transactions that violate regulations, alleviating employees from performing this process manually. 3. Fraud Detection Using AI to analyze customer data and transactions can help pinpoint unusual, suspicious or fraudulent activity that may be overlooked by a human. AI can automate the data collection process and significantly improve the speed of response to any of these detected activities. The moment a suspicious transaction occurs, AI will sound the alarm and notify the appropriate financial institution personnel. This detection can also provide visibility into the more common types of bank fraud, such as credit card abuse, account-opening fraud, overdraft abuse, payer-payee collusion and account takeover. Using AI to simultaneously mitigate and prevent fraudulent activity can help alleviate not only the oversight burden but the financial loss as well. Financial Institutions Should Focus AI Efforts on 4 Key Areas Utah Banker 12
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