How AI is transforming banking

&nbsp

Artificial Intelligence (AI), data utilisation, the changing nature of brick-and-mortar entities: the digital revolution is going full speed ahead. The global banking sector is experiencing unprecedented changes, arguably the fastest in modern history. These transformations are set to permanently alter the nature of traditional banking and forge numerous new relationships between banks and their customers. Recognising the importance of investing in digital services, banks saw an opportunity to streamline processes and reach a broader customer base. The Covid-19 pandemic-induced lockdowns forced all sectors to embrace technology or risk permanent shutdown, catapulting the development of these innovative technologies.

Since then, innovation in the digitalisation of banking has made headway, with AI pushing the transformation further. The McKinsey Global Institute estimates that the banking sector stands to benefit significantly from generative AI, which could add between $200bn and $340bn in value annually (equivalent to nine to 15 percent of operating profits) through increased productivity.

However, many users take the development of these technological services for granted, not realising they result from years of technical evolution and exhaustive trials before banks put them out in the world. It is crucial to emphasise the importance of the testing environment, especially after witnessing widespread service outages globally due to an update by cybersecurity firm CrowdStrike. The event highlighted the sensitivity of global systems that manage trillions of businesses and data points in real-time and have become intertwined with every aspect of our lives.

Kuwait International Bank (KIB) understands the vitality and delicateness of integrating digital technology across its areas of business. Striving to ensure a balance of innovation and security, KIB diligently works to offer the best digital services to its customers, those that fit their modern lifestyles and cater to a variety of segments in society, while maintaining their utmost trust.

This is the result of a long-term digital infrastructure investment strategy, which operates on two fronts. The first focuses on new services, emphasising flexibility and speed in their launch while ensuring their continuity and system robustness. The second concentrates on a solid digital infrastructure, core to any banking operation.

Leading the charge
At the heart of KIB’s investments in digital infrastructure is the KIB Digital Factory, a unique model in the local banking sector. This innovative concept not only protects, tests, and develops the bank’s digital services through collaboration with various departments, primarily cybersecurity and information technology, but also engages with customers, gathering their opinions and feedback on services. This approach aims for rapid, continuous, and flexible development, which is a cornerstone of successful banking operations. Consequently, KIB has been working diligently on its innovative digital offerings. It has launched not one, not two, but three state-of-the-art digital banking platforms since 2023.

As digital banks make headway in the financial market, the role of the traditional bank is being redefined

KIB completely revamped its retail app to provide customers with an advanced banking experience. KIB Mobile now offers comprehensive access to financing details, payment schedules, account management, banking cards, and investments. Customers can manage their financial portfolios, make faster decisions, and use quick services such as transfers, payments, and managing beneficiaries.

Additionally, the KIBPay service allows for easy payment requests, account refills and bill splitting.

What’s more, KIB introduced the WAMD service for instant payments and money transfers via the KIB Mobile app. Powered by KNET, the service allows easy and secure account-to-account transfers using a valid number, without sharing sensitive banking information.

For corporate customers, the bank launched its corporate online banking platform designed to simplify managing employees’ banking operations and financial details. The platform allows for personalisation based on roles and responsibilities, ensuring users have access only to the tools they need. Customers can also place and redirect requests to designated team members for streamlined processes. Key features include a tracking dashboard for monitoring bank interactions and a POS dashboard for an overview of financial operations via POS, MasterCard, Visa or KNET.

Meanwhile, real estate customers can benefit from the first-of-its-kind KIB Aqari platform, offering tailored services and innovative solutions for all real estate needs. KIB Aqari features digital appraisal requests and follow-ups, QR code verification of appraisal reports, automated rent collection, and late payment tracking, adding convenience to real estate management.

In terms of international financial transfer systems, KIB offers SWIFT and GCC cross-border payment system (AFAQ) services. The bank is currently working on adding three new international transfer services to enhance customer experience by providing greater convenience, speed and security.

AI is the new buzzword
One of the main 2024 digital banking trends is the use of AI to aid in everyday banking needs. Among these are predictive budgeting tools through which apps can turn analysis into actionable budgeting advice and insights, a feature the Digital Innovation and Data Intelligence Department at KIB did not miss.

Many banking functions are moving into the realm of virtual entities

KIB introduced a financial tracker tool to its retail digital app, offering customers a variety of benefits. These include a quick financial overview for instant snapshots of spending and savings, detailed expense tracking for better financial control, monthly comparison for month-on-month spending comparisons, bespoke budgeting to set and track budgets in real-time, and advanced analytics for personalised spending behaviour analysis to make informed decisions.

The influence of AI on banking operations is significant. AI investment is expected to reach $97bn by 2027, as mentioned in an article by the International Monetary Fund’s Finance and Development magazine. This AI transformation involves optimising processes, boosting efficiency, and increasing productivity. AI-driven technologies are utilised to automate repetitive tasks, enhance accuracy and accelerate processing times.
Take KIB’s WhatsApp interactive service, for example. AI-powered chatbots are now capable of addressing customer queries with precision, personalisation, and efficiency, making KIB WhatsApp a significant enhancement to the bank’s tech-based solutions and a key part of its digital infrastructure investment journey.

AI has also become crucial in data analysis, a pivotal aspect of banking operations. British mathematician Clive Humby famously stated, “Data is the new oil, and it will drive the economy forward in the coming decades.” Some now argue that data is even more valuable.

KIB has been among the pioneers in recognising the undeniable importance of data and its security, and the necessity of leveraging it to serve customers. Data is a vast and complex domain, necessitating the use of technology for its analysis and to deliver final products that benefit each in a personified manner.

All the while, KIB tirelessly works to safeguard its customers’ and investors’ data, as evidenced by it being awarded the ISO 27001:2022 International Certificate for Information Security Management System in January 2024 for the 10th consecutive year.

A banking paradigm shift
A shift in the spatial nature of banks is another change the industry is witnessing. Many banking functions are moving into the realm of virtual entities. In other words, the reasons for customers to visit a bank’s physical premises have changed. Citibank, for one, found that teller transaction volume decreased by 40 percent compared to pre-Covid-19 levels, as reported by Bloomberg.

In today’s world, customers no longer need to visit the bank to conduct many of their transactions. Why would a customer pass by a branch to transfer cash from their account when they have instant transfer services and app-based transfers? And why should they open an account at a branch when they can do so virtually?

As digital banks make headway in the financial market, the role of the traditional bank is being redefined. Using technology to reduce physical visits to a bank’s premises, relying instead on the internet and smart devices for most services, is the future.

Well aware of this, KIB has begun launching many unique services aimed at serving customers in a new manner. In November 2023, KIB launched the interactive teller machine (ITM), combining the convenience of traditional ATM services with the personalised touch of in-person banking. This cutting-edge machine enables customers to perform a wide range of banking transactions with the assistance of a live, remote teller through high-definition video and audio communication.

During the same month, KIB reopened its head office branch after redesigning it to provide an interactive environment for customers. Equipped with the latest innovations and modern financial technology, it steers away from a typical corporate and banking setting. Later in February 2024, the bank opened a new branch in the Sabah Al-Salem area, featuring the most advanced digital banking devices and interactive screens to cater to the customers’ needs in an innovative approach.

With increased reliance on technology and the ease of completing most transactions without needing to set a foot in a bank branch, the current trend will ultimately lead to more virtual branches. However, this is considered a long-term change in the region and is still in its early stages.

As we navigated through 2024, the global banking sector is at a pivotal moment that may change its face forever. The digital banking sector continues to evolve at a rapid pace, with the integration of AI and other advanced technologies fundamentally changing how customers interact with financial services. The extent to which banks can benefit from these technologies is a developing story. Banks like KIB that embrace this digital revolution are well-positioned to thrive in this new era of banking, setting new standards in the industry and creating a more inclusive, efficient and customer-centric financial ecosystem.