Taken from the blog of Joe Casali, AAP, NCP, EVP, Payments Innovation, NEACH
Artificial intelligence (AI) is gaining ground as more financial institutions are partnering with FinTechs to automate rote processes and prevent fraud. As I mentioned in my blog a few weeks back, the banking and finance industry’s spend on AI increased almost 83 percent—to $696.3 million in 2018 alone with projections of almost $6.3 billion by 2025.
These numbers are significant, but what does artificial intelligence look like on a practical level?
Greg Woolf, the founder and CEO of Coalesce.ai, an AI software platform that automates risk and compliance workflows in the financial services industry, shares a case study from his files:
Monitoring and surveillance of financial crimes has doubled in the last five years at financial institutions, reaching 10-20% of operating costs. To combat these costs, Coalesce.ai uses artificial intelligence (AI) to reduce up to 90% of a financial institution’s manual surveillance and monitoring and to prevent and detect fraudulent activity. This saves time, money and reduces risks.
According to the U.S. Federal Trade Commission, synthetic identity fraud is now the fastest growing and hardest form of identity theft to detect. It costs $16.8 billion annually and banks spend countless hours trying track down people who don’t even exist. Fraudsters aren’t just stealing identities, they’re creating them.
Coalesce is working with a national lender to detect and prevent synthetic identity fraud at the loan application stage. The high-volume of loan applications prevents proactive fraud screening before funding. With the Coalesce product, 80% of fraudulent applications are detected, with the potential to save the lender $7.5 million per year.
While AI offers numerous applications, they generally fall into a few categories—fraud prevention, chatbots, and personalization.
Posh, for example, is using conversational AI to interact with users in a natural, fluid way. They presented at NEACH’s Payments Management Conference (PMC) a few months ago on the topic of using context-aware conversational AI to engage members and boost conversations.
These are just a few of the ways artificial intelligence is changing the way financial institutions do business.
Clearly, AI has the potential to transform the way we work by automating manual tasks and freeing up staff to focus on more strategic challenges and opportunities. Overall, AI can help financial institutions work smarter, reduce fraud, and strengthen customer relations—a win for us all.
We will continue the conversation on artificial intelligence at NEACH’s Innovating Payments Conference, October 9-10, 2019, at the Hilton Boston Logan Airport.