Leveraging AI could revolutionize card issuance for financial institutions

Artificial intelligence (AI) has touched every facet of technology and beyond and over the past few years has played a pivotal role when it comes to banking and finance. Now financial institutions have turned to AI to make credit card issuance a robust experience for both customer and financial institution.

According to a survey conducted jointly by the World Economic Forum and the Cambridge Centre for Alternative Finance, a significant portion of executives anticipate embracing AI on a large scale within the next two years, recognizing it as a huge driver for their businesses. Key insights from the survey include:

• Presently, 85% of financial services organizations incorporate AI in some capacity.
• 77% foresee AI becoming indispensable to their operations within the next two years.
• Within the same timeframe, 64% aim to extensively integrate AI into their processes.
• Approximately 52% have already developed AI-powered products and services.
• Half of the respondents perceive AI as a competitive threat as new players enter the market.

AI to enhance the customer experience

One of the biggest impacts of incorporating AI into card issuance is the way it streamlines customer service and offers a personalized experience. Via chatbots and virtual assistance, AI turns the credit card management from a customer perspective into more than just a place to make a payment.

One of the latest trends in AI for financial institutions is conversational AI, this takes chatbots and virtual assistants to a new level. From a customer perspective, conversational AI allows customers to ask a question beyond the typical “what’s my balance.” Through conversational AI, customers gain deeper insight into their spending habits and trends that allow them to meet their financial goals. Some examples of this include if a customer is curious about where they spent the most, even what days they spent the most or what their last transactions were. The customer can simply open their app, and ask their question, “What are my last 5 transactions,” they are then provided their answer and insight into their spending in a matter of seconds.

AI-powered systems allow customers to gain a deeper understanding into their transactions and round-the-clock support. Additionally, AI-driven sentiment analysis enables financial institutions to gauge customer feedback and sentiment accurately, allowing financial institutions to improve delivery and best meet their customer needs continually.

AI for card management and fraud detection

At the heart of AI’s value proposition for card issuers is the ability to optimize card management and fraud detection. By leveraging AI-driven automation, tasks such as application processing, credit scoring and transaction monitoring can be streamlined, significantly reducing manual intervention and processing times.

In the fight against fraud, AI is a strong tool in an institution’s arsenal. With advanced algorithms capable of analyzing large amounts of data in real-time, AI identifies suspicious patterns and potential fraud attempts. Additionally, AI-powered fraud detection systems continuously evolve and adapt to new threats, providing a proactive defense against the ever-evolving tactics employed by fraudsters.

Compliance with regulatory frameworks and safeguarding sensitive customer data remain a high concern for FIs. AI adoption should align seamlessly with the institution’s objectives of enhancing competitiveness and market positioning within the evolving payments landscape.

AI for credit decisioning and issuance

Credit decisioning and analytics is not a new concept, many larger institutions have been using it for years but it’s never too late to incorporate this AI function into an institution’s tech stack. One of the biggest parts of credit card issuance is making sure that the customer is a viable candidate and what their credit limit should be based on their history, especially for individuals who may have little to no credit history. Through the use of AI, financial institutions have access to a robust tool that pulls and analyzes an individual’s credit data across multiple sources to provide insight into what the FI should offer the individual that is minimal risk to the institution.

Similarly, AI can analyze an existing relationship and present offers to customers that promote profitability and cross-selling to grow the institution.

AI incorporation for the future

For financial institutions, time is of the essence to incorporate AI into their tech stack. Customers are driven by instant gratification and access and without AI, this is difficult to provide and could cause FIs to lose customers due to outdated systems and initiatives.

Bhavin Turakhia is co-founder and CEO of Zeta.