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June 11, 2024 - Greg Oprendek

How to Build Safe, Usable Products with AI

Financial institutions face the same balancing act today as they have for years—providing a smooth and fast customer experience while mitigating fraud risks that often follow those changes.

Most industry leaders and forward-thinking FIs have turned to artificial intelligence and machine learning to accomplish the latter. However, too many are underutilizing these powerful tools to also accomplish the former.

There are understandable reasons for this. Engineers and product managers spend a heap of their time designing personalized customer experiences by tweaking everything from their core computing infrastructure to specific customer touchpoints. This is time-consuming work and only encompasses the customer experience side of their dual responsibility to win customers while banishing fraudsters.

AI can be a major part of the solution. When your organization invests in great AI talent as well, it will greatly improve the efficiency and effectiveness of both your platform and your expert team. In this blog post, we’ll explain exactly how to build usable products atop an AI-powered solution that both improves customer experience and mitigates fraud, using the DataVisor AI and machine learning-powered platform as an example.

Using AI to enrich your customers’ experiences

The first area where AI and ML have a massive impact is fraud prevention which preserves a smooth customer experience. Safety is paramount for customers when choosing where to open an account. As a recent PYMNTS study found, ¼ of customers say the safety of their money and personal information is the most important factor in choosing a bank. That more than doubled the second highest ranking factor, the price of account opening.

While AI offers many advantages to the fraud teams that leverage it, it all boils down to one key point—modern fraud threats require modern fraud solutions. There are a handful of important situations in modern banking where AI greatly mitigates fraud risk to enable better customer experiences.

Real-time payment protection

In the era of real-time payments, FIs must balance offering instant transfers that settle immediately with preventing fraudsters from victimizing good customers. Thanks to Generative AI, deepfakes, and other ML-powered scams, fraudsters are more dangerous than ever and can attack in real time.

With AI-driven real-time monitoring, fraud detection systems can adapt to evolving threats and detect suspicious activities in milliseconds, bolstering the safety of instant transfer services. With capabilities like behavioral analysis, machine learning systems spot fraud patterns in large datasets while recognizing patterns of normal customer behavior. This ability leads to a second key customer experience-enhancing benefit of using AI to build financial products…

Lowering false positives for a seamless user experience

Customers expect fast transactions with instant movement and settlement of transfers. They also expect to enjoy these benefits without being bogged down by blocked activity due to false positives. Traditional rules-based systems don’t have a view of the full picture of customer activity, so they can flag what is normal behavior for a certain customer as fraud based solely on non-personalized rulesets.

While customers prioritize safety, they are easily frustrated at friction caused by having to confirm transactions, or worse, inability to use their accounts due to fraud flags placed on them by non-adaptive systems.

AI platform tools, specifically ones like DataVisor’s Decision Flow, allow FIs to detect and prevent fraud activity while also enabling them to customize smooth experiences for trustworthy customers. Because of the reduced rate of false positives, these custom experiences both reveal abnormal behavior and enhance the experience for good customers.

Recommendations for new products or services

AI can analyze massive datasets to parse out crucial insights, and that ability helps customize product offerings for customers. Considering transaction history, spending patterns, and key customer preferences and habits, financial institutions can tailor products and services to meet individuals’ needs more effectively.

Through predictive analytics, FIs can forecast future trends and behaviors based on historical data to anticipate customer needs and preferences. They can also use this ability to create proactive product recommendations and personalized offers, leading to higher customer satisfaction and loyalty. These personalized product recommendations might include investment opportunities, credit cards, or insurance plans.

What’s more, AI can help you time alerts about new products to reach customers at the exact right time—like when they are preparing for a large new purchase and may need a loan, or if they are traveling and would benefit from using unique rewards their card offers.

Any product or service you want to offer your customers is likely to be more successful when it is highly personalized.

Faster credit scoring and approvals for new products

AI-powered credit scoring systems empower FIs to profile customers in real time and offer instant approvals for new products, even ones that have just been introduced. Cutting the old “apply, then wait for review and approval” process both boosts customers’ experience and instills trust that their FI is using the best modern technology available when developing products.

FIs can also look at similar groups of customers based on risk profile, behavior, and preferences to segment them into distinct groups. Developing new products for these larger similar groups helps increase their effectiveness upon launch.

ai improving internal processes

Leveraging AI to improve internal processes

Fraud prevention is a key application of ML and AI for FIs, but it’s far from the only way these tools benefit organizations. Developing new financial products can be done more efficiently and effectively when using AI to help design them—or even better, including AI capabilities in the new product itself.

Lowering operational costs in product design

FIs have different teams working on different areas of their business, but in the end, each team’s time affects the bottom-line revenue. When fraud teams spend more time manually reviewing potential fraud cases, tuning rules, and writing rule descriptions, that costs an FI and takes away time they could be spending actually fighting fraud. Likewise, teams that are developing new products and services lose time on manual tasks that can be entrusted to well-trained AI models that possess a deep understanding of customer behavior.

AI, specifically Generative AI-powered platforms like AI Co-Pilot from DataVisor, significantly lowers these operational costs by automating time-consuming and costly manual tasks. Testing new offerings, creating target customer segments, and checking for fraud risks and vulnerabilities can all be automated through GenAI.

Automated customer service

Reliable and helpful customer service is an important part of any FI’s user interface. This is especially true as customers begin using new products and services. AI-powered chatbots and virtual assistants can comfortably handle routine customer inquiries and transactions, providing immediate responses to questions, account inquiries, and basic troubleshooting. These virtual agents are available 24/7, ensuring customers can access assistance whenever they need it. They also add much less to overhead costs than operating a full team of round-the-clock customer support agents would.

Leading AI platforms with state-of-the-art Natural Language Processing (NLP) algorithms understand and respond to natural language queries as if a customer were talking to a real live agent. They can automate account management like updating personal information, transferring funds, and scheduling payments.

NLP-powered systems can do more than simple customer support, too. They can proactively engage customers through personalized messages, alerts, and notifications based on their behavior and preferences. This helps financial institutions stay connected with customers, provide relevant updates, and address potential issues before they escalate.

When necessary, AI systems intelligently route customer inquiries to the appropriate channels or personnel based on the nature and complexity of the request. This ensures that customers receive prompt and accurate assistance, improving satisfaction and reducing resolution times.

Integrating data from every source

Data orchestration integrates data from various sources to create a comprehensive view of potential risks. AI-driven fraud prevention systems leverage this ability to identify and mitigate fraudulent activities effectively. Beyond fraud prevention, integrating data from every source also facilitates the creation of more holistic products.

Through aggregation of data like transaction records, customer profiles, device information, and external databases, FIs see the full picture of a customer’s journey. They can analyze data from different channels and touchpoints, like online banking, mobile apps, ATM transactions, and point-of-sale terminals to create new products that appeal to a user’s unique behavior.

In better understanding customer needs, FIs can identify cross-selling opportunities and personalize product offerings to enhance the overall customer experience. Just as personalized ads on social media platforms help shoppers find exactly what they want and see relevant products, AI helps FIs offer customers exactly the new products and services that benefit them most.

How to start creating usable products with AI

If your FI isn’t already leveraging an AI-powered fraud prevention platform, you should explore adopting a future-proof compliance-focused holistic solution like DataVisor as soon as possible. This will not only modernize your fraud detection and prevention, but cut down on overhead costs and vastly increase your efficiency and effectiveness in fraud prevention overall.

Once you have a modern AI and ML-powered solution in place, the first step toward designing usable, winning products that earn customers to your organization is adopting tools like data orchestration, Generative AI, and device intelligence. These unlock the insights to develop better, personalized products and services and promote them directly to the customers most likely to use them.

Learn more about the ways you can leverage AI to create dependable and attractive products at your FI by chatting with our team of experts. They can show you a personalized demo of DataVisor’s award-winning platform, dive deep into the specific tools that would benefit your team most, and guide you in implementing these capabilities in your organization.

about Greg Oprendek
Greg is a passionate digital marketer, avid basketball fan, aspiring fraud expert, and Content Marketing Manager at DataVisor.
about Greg Oprendek
Greg is a passionate digital marketer, avid basketball fan, aspiring fraud expert, and Content Marketing Manager at DataVisor.