How AI is transforming banking

Artificial intelligence (AI), use of data, changing nature of physical entities: the digital revolution is advancing at full speed. The global banking industry is experiencing unprecedented change, arguably the most rapid in modern history. These transformations are expected to permanently change the nature of traditional banking and forge many new relationships between banks and their customers. Realizing the importance of investing in digital services, banks saw an opportunity to streamline their processes and reach a wider customer base. The lockdowns induced by the Covid-19 pandemic have forced all sectors to adopt technology or risk permanent shutdown, thus catapulting the development of these innovative technologies.

Since then, innovation in the digitalization of banking has advanced, with AI pushing the transformation even further. The McKinsey Global Institute estimates that the banking industry stands to benefit significantly from generative AI, which could add between $200 billion and $340 billion in value per year (equivalent to 9% to 15% of operating profits) through to increased productivity.

However, many users take the development of these technological services for granted, not realizing that they are the result of years of technical evolution and exhaustive testing before banks brought them to market. It is crucial to emphasize the importance of the testing environment, especially after witnessing widespread service outages globally due to an update made by cybersecurity company CrowdStrike. The event highlighted the sensitivity of global systems that manage billions of businesses and data points in real time and are now intertwined with every aspect of our lives.

Kuwait International Bank (KIB) understands the vitality and delicacy of integrating digital technology into all its areas of business. Striving to ensure a balance between innovation and security, KIB diligently strives to offer the best digital services to its customers, those that match their modern lifestyles and cater to a variety of segments of the society, while maintaining their utmost confidence.

It is the result of a long-term investment strategy in digital infrastructure, which operates on two fronts. The first focuses on new services, favoring the flexibility and speed of their launch while guaranteeing their continuity and the robustness of the system. The second focuses on a solid digital infrastructure, at the heart of any banking operation.

Lead 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 in collaboration with different departments, mainly cybersecurity and information technology, but also engages with customers, collecting their opinions and feedback on the services . This approach aims for rapid, continuous and flexible development, the cornerstone of successful banking operations. Therefore, KIB has been working diligently on its innovative digital offerings. It has launched not one, not two, but three cutting-edge digital banking platforms since 2023.

As digital banks advance in the financial market, the role of traditional banking is being redefined

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

In addition, the KIBPay service facilitates payment requests, account replenishment and bill splitting.

Additionally, KIB introduced the WAMD service for instant payments and money transfers through the KIB Mobile application. Powered by KNET, the service allows simple and secure account-to-account transfers using a valid number, without sharing sensitive banking information.

For corporate customers, the bank launched its online banking platform for businesses, designed to simplify the management of banking transactions and employee financial information. The platform allows for customization based on roles and responsibilities, ensuring users only have access to the tools they need. Customers can also address and redirect requests to designated team members for streamlined processes. Key features include a tracking dashboard to monitor banking interactions and a POS dashboard for insight into financial transactions via POS, MasterCard, Visa or KNET.

Meanwhile, real estate clients can benefit from the premier KIB Aqari platform, offering tailor-made services and innovative solutions for all real estate needs. KIB Aqari offers digital valuation requests and tracking, QR code verification of valuation reports, automated rent collection and late payment tracking, adding convenience to property management.

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

AI is the new buzzword
One of the top digital banking trends of 2024 is the use of AI to support everyday banking needs. These include predictive budgeting tools through which apps can turn analysis into actionable budgeting advice and insights, a feature that KIB’s digital innovation and data intelligence department hasn’t missed.

Many banking functions are moving into the realm of virtual entities

KIB has introduced a financial tracker into its digital retail app, providing customers with numerous benefits. These include a quick financial overview for instant snapshots of spending and savings, detailed spending tracking for better financial control, monthly comparison for monthly spending comparisons, tailor-made budgeting to set and track budgets in real-time and advanced analytics for personalization. analysis of spending behavior to make informed decisions.

The influence of AI on banking operations is significant. Investments in AI are expected to reach $97 billion by 2027, as mentioned in an article in the International Monetary Fund’s Finance and Development magazine. This AI transformation involves optimizing processes, improving efficiency and increasing productivity. AI-based technologies are used to automate repetitive tasks, improve accuracy and speed up processing times.
Take KIB’s interactive WhatsApp service, for example. AI-powered chatbots are now capable of responding to customer queries with precision, personalization and efficiency, making KIB WhatsApp a significant enhancement to the bank’s technology solutions and a key part of its infrastructure investment journey digital.

AI has also become crucial in data analysis, an essential aspect of banking operations. British mathematician Clive Humby said: “Data is the new oil, and it will drive the economy forward for decades to come. » Some now say that data is even more valuable.

KIB was among the pioneers in recognizing the undeniable importance of data and its security, and the need to leverage it to serve customers. Data is a vast and complex field, requiring the use of technology for its analysis and to provide end products that benefit everyone in a personified way.

Meanwhile, KIB works tirelessly to protect the data of its customers and investors, as evidenced by obtaining the ISO 27001:2022 international certificate for information security management system in January 2024 for the 10th year consecutive.

A shift in the banking paradigm
A change 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 why customers visit a bank’s physical premises have changed. Citibank, for example, found that over-the-counter transaction volume was down 40% from pre-Covid-19 levels, as reported by Bloomberg.

In today’s world, customers no longer need to visit the bank to complete many of their transactions. Why would a customer go through an agency to transfer money from their account when they have instant transfer services and app-based transfers? And why should they open an account in a branch when they can do it virtually?

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

Realizing this, KIB began launching many unique services aimed at serving its customers in a new way. In November 2023, KIB launched the Interactive Automated Teller Machine (ITM), combining the convenience of traditional ATM services with the personalized touch of in-person banking. This state-of-the-art machine allows customers to perform a wide range of banking transactions with the assistance of a live, remote teller using high-definition video and audio communication.

In the same month, KIB reopened its headquarters after redesigning it to provide an interactive environment for customers. Equipped with the latest innovations and modern financial technology, it moves away from the typical corporate and banking framework. Later in February 2024, the bank opened a new branch in Sabah Al-Salem area, equipped with the most advanced digital banking devices and interactive screens to meet customer needs in an innovative approach.

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

As we move through 2024, the global banking industry finds itself at a pivotal moment that could change its face forever. The digital banking industry continues to evolve at a rapid pace, with the integration of AI and other advanced technologies fundamentally changing the way customers interact with financial services. The extent to which banks can benefit from these technologies is an evolving 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.