How Neo Banks Empower Customers Using Artificial Intelligence
The banking industry has also been in the midst of a race. Consumer expectations, technology disruptions, regulations, and external factors like the recession have all pushed it to maintain economic stability and growth. It has provided us with several innovations that improved customer experiences, but the most notable ones that we take for granted are ATMs.
Barclays introduced automated teller machines (ATMs) in the U.K. In response to long waiting lines in banks, the machines were a godsend to withdraw money quickly. Such was the success of this invention that banks worldwide copied it and established ATMs of their own. It helped curb paper wastage, improved efficiency, and improved operations tremendously.
As times change, business models adapt to stay relevant. The COVID-19 pandemic exposed cracks within legacy systems. Its archaic way of functioning had tested the patience of retail and corporate customers. Although banks adapted fast by upgrading their infrastructure to sustain customer queries, there was a need for a new banking system. Neobanks were gaining approval from digitally-savvy customers and creating a buzz in financial circles.
400 licensed Neobanks have been launched in the last decade — McKinsey
How is the Deal with Neobanks?
Neobanks are financial institutions with a digital-only presence. They rose by employing modern technologies like edge computing, cloud, interactive web design, and mobile applications. It understood and studied customer behavior and sensed the need for a segment of the crowd that is perennially online. But what is the difference between a neobank and a digital bank? One of the major differences is that a neobank is a virtual bank, while a digital bank is an existing bank with a digital presence.
Neobanking solutions have brought the competition to traditional brick-and-mortar institutions. It brought in various customers through gamified features and helped them understand their finances. Most importantly, it collected customer behavior, banking patterns, and online trends in the form of data.
How AI Turbocharges Neobanks
Automation of Processes — The operational efficiency of neobanks is enhanced through the automation of internal processes, a feat achieved with the integration of AI. Routine tasks such as customer onboarding, transaction monitoring, and compliance checks can be automated, reducing the workload on human resources and minimizing errors.
Fast Product Launches — Neobanks, characterized by their agility and innovation, benefit significantly from AI in expediting product launches. Through machine learning algorithms, these banks can swiftly analyze market trends, customer preferences, and competitor offerings to identify lucrative opportunities. AI is leveraged for the rapid development and customization of financial products, allowing neobanks to stay ahead in a dynamic industry.
Prioritizing Customer Engagement — One of the hallmarks of neobanks is their customer-centric approach, and AI plays a pivotal role in elevating customer engagement to new heights. Predictive analytics algorithms analyze vast datasets to anticipate customer needs, enabling neobanks to offer targeted and personalized services.
Customer Security — As data has become crucial to functioning, it has also become a target of cybercrime. Customers require their banks to provide protection for their financial assets. New design of system architecture that ensure data security and privacy based on zero-trust design principles should be the priority of neobanks going forward.
Personalizing Customer Experiences — AI significantly creates personalized customer experiences and aligns services with individual preferences and requirements. Neobanks leverage machine learning algorithms to analyze transaction histories, spending patterns, and user interactions, enabling them to deliver bespoke recommendations and financial advice. This personalization will serve neobanks as customer expectations rise and digital banking increases. It can boost revenue and lower operational costs significantly. With online payments becoming beneficial, neobanks can leverage AI to ensure speedy transactions and reduce bottlenecks in bank-to-bank transfers.
Incorporating artificial intelligence has become a cornerstone for neobanks seeking to redefine the financial services landscape. Fast product launches, streamlined processes, customer-centric engagement, personalized experiences, and strategic partnerships with traditional banks are all made possible through the intelligent application of AI. Embracing these technologies positions neobanks at the forefront of innovation, ensuring a customer-centric, efficient, and competitive future in the financial sector.
Conclusion
Neobanks need to be free of the organizational silos present in traditional banks. Integration of AI across cross-functional teams to help them collaborate on cases as well as run as an independent unit will benefit them.
Neobanks need to be AI first in order to retain customers and create a moat against future disruptive technologies. Internet Soft is an AI development company in the USA capable of providing AI and ML solutions. Companies entering the neobank industry need to transform all layers of operations from customer engagement to operations to unlock lifetime customer value and better efficiency.
Redefine the banking experience by leveraging AI. Contact Internet Soft today for a quick resolution.
