Industry
Banking
Banking Services Transformation: Unlocking Exponential Value
Highlights
- Financial crime compliance teams of major financial institutions around the globe today have indicated their willingness to adopt AI enabled technologies. However, there are dilemmas around what to choose, where to start, whether to utilize in-house IT teams or external vendor support and so on.
- While enhancing CX is the focus for most FIs today, the ongoing research for innovative products, supported by regulatory technologies and solution service providers reflects a growing demand. The emphasis is shifting toward a wrapper solution that complements existing systems rather than outright replacements.
- Friction-free, faster, automated, digital and contactless data collation from customers, whether through portals or automated outreach, is still a challenge.
On this page
Introduction
FCCS are interested in GenAI and Agentic AI with its enhanced capability to initiate, adapt and take decisions, and enable improved and faster resolutions.
GenAI is expanding its dimensions for FCC by showcasing faster methods of case handling and managing closures. While GenAI enables quicker reads and summarizations of cases, the dilemma of whether agentic AI is a trustable addition to this world remains a question. Decisions on developing these technologies further by utilizing in-house IT teams vs. external vendor support, and where to start are also current quandaries.
Most FIs are aware of the key challenges of human and bot-based fraud using GenAI realms. AI-based face swapping frauds, and voice cloning are fast evolving technology concerns and ensuring a friction-free environment is a compelling requirement for all FIs. The evolving digital data landscape has paved the way for multiple opportunities in the KYC process. It allows for improvements and risk validation by leveraging new technologies. This has enabled greater adoption of straight-through processing solutions, supported by significant ongoing investments across the industry. The projected KYC spend on tech advancement over the next five years is expected to grow significantly.
GenAI drives FIs
Banks are applying AI to enrich risk decision making, minimize manual reviews, and meet evolving regulatory expectations.
GenAI ensures benefits of streamlined onboarding, faster risk assessment, continuous KYC monitoring, providing overall impacts to reduced costs and improved customer experience.
Customer data collection: Even today, while many larger banks have adopted digitized models, smaller institutions still rely on collection and documentation of key customer data through manual outreach. Banks manually send emails or even rely on letters sent by case handlers and received data are then copied over into KYC workflow tools. These tasks are often seen as low value, an attitude that leads to institutional inattention, which tends to increase the chance of errors.
Critical aspects
Key challenges driving FI focus on technology and AI based solutions
- Transaction analysis: Around half of KYC-review time is spent on transaction analysis. The reasons for the outsized expenditure of time can be diverse. The scope of the exercise can be ill defined, taking between six months and three years. Appropriate tools might be inadequate, such as raw Excel data requiring manual analysis. Descriptive statistics, which can offer a quick view of customer-transaction profiles and red-flag transactions, may be unavailable.
- Sources of wealth: Determining the customer’s source of wealth is another challenge. Case handlers often lack targeted insights. They are unable to categorize data into types of income (salary, investment, rental, and so forth) and do not have access to descriptive statistics for transaction groups. In addition, guidelines on the scope of the investigation and documentation requirements often are not sufficiently detailed.
Solutions
Leveraging technologies that help enhance customer journeys.
Enhancing customer journeys in KYC specific areas using GenAI based interventions for performing auto-filling of data, summarizing cases, document validation, transactional insight creation, complaint resolution etc. are some aspects of this revolutionized tech adoption.:
Open AI utilities can be leveraged by automating document analysis, extracting and verifying customer data with high accuracy, and flagging anomalies in real-time. Use cases may include summarizing lengthy case files, auto-extracting key fields from ID documents, and generating compliance-ready reports. This reduces manual effort, speeds up onboarding, and delivers smoother customer experience.
ChatGPT can enable intuitive, conversational interactions that simplify complex processes. It can guide customers through onboarding, answer compliance-related queries in real-time, and assist analysts with quick case summarization. Use-cases may include interactive KYC form-filling, automated clarification of missing documents, and generating analyst-ready summaries from unstructured data.
AI-based transaction analytics can detect unusual patterns, identifying risks early, and providing real-time insights into customer behavior. This enables faster, more accurate risk profiling and a seamless compliance experience. Some use-cases may include monitoring for suspicious transactions, segmenting customers by risk profiles, and enabling proactive compliance interventions. This ensures faster onboarding, reduced false positives and a smoother customer journey.
FIs are exploring technology segments that bring together process automation, integrated tools and cognitive elements, piloting them to test feasibility and assess business impact.
Way forward
To remain competitive, financial institutions require solutions that can efficiently summarize key inputs from extensive documentation. Such tools should not only highlight updates made to a case file through data feeds but also capture changes introduced by analysts during outreach. GenAI-based summarization is increasingly being viewed as a key solution to help scale and meet this demand.
GenAI promises to accelerate the review process by extracting and consolidating all key elements of a case. The inferences generated must then be validated by analysts to ensure completeness and accuracy before the case is finalized. AI and ML being used in KYC processes ensures future proofing the business from upcoming challenges and risks by ensuring more time is being devoted towards risk validations than non-value additions like extractions and manual reading of documents.
