How AI Can Help Banks Reduce Operational Costs (2024)

AI Automates Basic Tasks and Improves Operational Efficiency

“AI can help financial services organizations control manual errors in data processing, analytics, document processing and onboarding, customer interactions, and other tasks through automation and algorithms that follow the same processes every single time,” according to a report from Google Cloud. In short, AI can be a timesaver on every level.

In the front office, for instance, automating data entry and other routine tasks enables bank employees to spend time on more complex, valuable projects. In customer service departments, AI can respond to routine queries, freeing up human agents to tackle bigger issues. AI-powered chatbots can also provide account information and assist in basic banking transactions. That’s why nearly half of U.S. bank executives plan to use generative AI to enhance customer-facing chatbots and virtual assistants.

When it comes to back-office operations, AI gives time back to employees by automating account reconciliation, invoice processing and other administrative tasks.

Human error causes 52 percent of operational incidents in financial organizations, but AI tools reduce errors across the board, particularly in manual data entry.

“AI doesn’t replace jobs, AI replaces tasks,” explains Agustín Rubini, director analyst with the financial services and banking team at Gartner. “The jobs that typically a junior person does, they have more tasks. Eighty percent of your tasks can be automated.”

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AI Fosters More Secure, Compliant Environments

AI’s ability to analyze large data sets and detect unusual patterns and behaviors is also helping banks to mitigate fraud and improve the security of financial transactions.

Check fraud — which first became famous with Frank Abagnale Jr.’s 1960s scam, the subject of the 2002 movie Catch Me If You Can — is surging. Suspicious activity reports more than tripled between 2018 and 2022, according to a report from S&P Global, and 2023 tallied more than 447,000 reports of check fraud through October alone.

However, AI’s impact in the battle against check fraud is perhaps equally staggering. At the end of February, the U.S. Department of the Treasury announced it had recovered over $375 million in fiscal year 2023 thanks to its enhanced fraud detection process that leverages AI.

385%

The percentage increase in check fraud in the U.S. since the COVID-19 pandemic

“It takes a human being about 90-plus minutes to review each case” of reported check fraud, Jay Venkateswaran, head of the financial services and technology business unit at WNS, tells S&P Global. “Generative AI is a perfect fit for this particular process because what used to take 90 minutes can now be done in under 30.”

AI can also have a profound impact in the battle against money laundering, another complex problem worth up to $2 trillion annually. By monitoring transactions, technologies such as Google Cloud’s anti-money laundering AI tool can detect suspicious activities.

This enables financial institutions to take preventive actions faster. With time on their side, they can improve compliance with anti-money laundering regulations and reduce the risk of legal and financial consequences. With global AML fines against companies rising 50 percent year over year, this is a key way that AI can help banks reduce costs.

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• Data Management
• Compliance
• Digital Transformation
• Innovation
• Data Loss Prevention
• Risk Assessment
• Threat Prevention