AI (#Artifical Intelligence) relevance for Digital First Banks

Artificial intelligence as a technology will be at the core of the Digital First Banks DNA.

Traditional banks have decades of experience in streamlining processes to manage banking frauds. They have been experiment, testing, adopting, or rejecting banking technologies that have not been working.

This is the core area where Digital-first banks will struggle if they do not pay attention.

As a technology player, they know the technology, but the banking industry is very regulated and customer expectations from the banks are very high.

KYC and Customer onboarding- In Singapore, the ‘Digital ID’ can be verified by the banking/fintech platforms on a real-time basis, but the video KYC is still to become mainstream. In Jan 2020, Indian Banking authority RBI- INTRODUCED KYC norms allowing banks and other lending institutions regulated by it to use Video-based Customer Identification Process (V-CIP), a move which will help them onboard customers remotely.

Manual processing of documents is already becoming extinct. Unfortunately, a lot of traditional banks are still not able to go PAPERLESS because they do not have AI-powered onboarding and fraud detection systems.

When it comes to digital bank account opening, the smooth onboarding experience ensures that the drop-off rate is reduced.

Digital banks will need to develop or join an ecosystem of partners that ensure Real-time ID verification and smooth onboarding/Video KYC

SOCURE identity verification system, ID+ Platform, uses ML/ AI to screen an applicant’s online, offline and social data to enable clients to meet strict KYC conditions. Socure’s KYC/CIP offering substantially outperforms legacy credit bureau solutions by 20–40%, taking the customer’s auto-approval rates from ~60% to ~90%.

Real-time risk (credit, financial crime, information) assessment- Huge volumes of transaction data, can be assessed using the AI models to arrive at insights related to the creditworthiness of a loan applicant. Intelligent underwriting is the future of the lending business.

Market risk, AML (anti-money laundering), compliance, Forex and cybercrime risk models can be designed.

AI/ ML for Payments/ACH Fraud — Let's start with checks. Banking still works a lot on cheques written by the current and savings account holders. Digital Payments are on the rise, but B2B payments still rely a lot on cheques (due to credit cycles. Over a period of time, digital-first banks can build data sets to distinguish good cheques from fraud cheques. Banking Platform’s neural networks can then leverage a set of comparative algorithms to differentiate good checks from anomalous/fraudulent ones. By automatically comparing various factors on scans of deposited checks to those in the database, AI trained model can escalate potential counterfeits in real-time. Over a period of time, the AI models will get smarter.

In 2019, DBS Bank did an alliance with EXIGER, the global leader in tech-enabled financial crime, risk and compliance solutions, to implement an artificial intelligence (AI) powered due diligence solution to streamline and further strengthen Singapore’s leading bank’s screening processes.

Product customization — Digital Lending, Cards, Mortgage, and Insurance requirements are unique for every consumer. Traditional banks have been selling ‘mortgage products’ based on flat or float interest rate concepts, the banking consumers now demand customized products ).

Predictive & Personalized banking journeys- Banking customers need financial or Robo-advisors who understand their needs. NLP Natural language, cognitive systems can present hypotheses, reasoned arguments, and recommendations that are unique to the interaction with the banking customers.

Alibaba cloud in 2015, launched DT PAI, China’s first artificial intelligence platform. DT PAI allows developers to analyze massive amounts of data to produce insights that predict user behavior and industry trends, all using simple drag-and-drop icons.

Alibaba (Ant Group) has won the Digital Wholesale banking license in Singapore (Monetary Authority of Singapore)

Traditional banks are catching up fast

BBVA bank uses AI to give insights to customers on upcoming expenses and even advice on financial management

“reduce bar/restaurant expenses by 10%”

“reduce expenses in a particular category by 2%”

Last but not the least, the digital-only banks will be operating without a branch, thus the customer service experience is going to be crucial.

When it comes to banking, the 7 day wait time, or no helpline access model that worked for e-commerce, and mobility platforms, may not necessarily work for platform banking.

This is the reason why banks usually offer 24 by 7 and toll-free helplines for urgent customer support. Chatbots and Virtual assistants that offer a great customer experience will critical for digital banks to win the customers from the traditional banks.

Read my other article on how to Build a digital-first bank


Sidhartha Sharma

Fintech, Platforms and Digital Ecosystem strategy expert

Views are personal



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Sidhartha Sharma- Future of Tech, Digital & Data

Sidhartha Sharma- Future of Tech, Digital & Data


~16yrs Consulting- McKinsey & BCG-Digital Strategy, Ecosystems & Ventures | Start-Up Mentor | Platforms | Digital-First | Author & TEDx Speaker. Views Personal