AI and CRM: Pioneering the Evolution of Banking as a Service

Venkata Mudumbai
Published 06/04/2024
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Evolution of Banking as a ServiceThe rapid growth and development of artificial intelligence (AI) tools and solutions have undeniably changed the technological landscape for global industries. As business leaders and developers construct new ways to implement automated functionalities into their organization’s infrastructure, enterprises are reshaping how they conduct business and engage with customers. This is especially prevalent in the financial services industry.

According to McKinsey’s 2023 banking report, generative AI could enhance productivity in the banking sector by up to five percent and reduce global expenditures by up to $300 billion. Predictive models help industry leaders better understand customer needs and preferences, drastically improving customer loyalty and retention. An enhanced way to manage these crucial relationships is vital. While predictive AI plants the seeds for ongoing client connections, customer relationship management (CRM) software is an internal tool for financial experts to gauge the impact of various customer relations and garner a complete 360-degree view of each client. With continual changes and developments in AI and CRM, it’s essential to understand its significant role in financial services and banking as a service (BaaS).


The significance of AI in financial services

A recent study states that the global AI in financial tech market size was valued at $9.45 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 16.5 percent from 2022 to 2030. As organizations transition from traditional, data-driven AI to generative AI solutions, financial service organizations worldwide are changing how they conduct business and satisfy customers’ financial needs. Recent AI developments are driving advancements in BaaS, automation, and data analysis and play a significant role in areas including risk management and mitigation, fraud detection and prevention, and operational efficiency.


Reshaping customer relationships with integrative AI

In addition to its many operational benefits, generative AI developments allow financial services organizations to gain, satisfy, and retain a broader customer base. Integrative AI tools and solutions can be implemented seamlessly into comprehensive CRM systems to enhance their capabilities. By leveraging new and emerging technologies such as machine learning, natural language processing, and predictive analytics, AI-enabled CRM systems process volumes of customer data, automate mundane tasks, simplify lead management, and derive valuable insights. These systems empower financial institutions to predict customer needs, efficiently resolve inquiries, and suggest relevant product offerings, ultimately fostering deeper connections and enhancing overall customer satisfaction.

The incorporation of AI into CRM strategies allows financial institutions to transcend traditional transactional interactions and embrace a more comprehensive approach to customer relationship management. By harnessing AI-driven insights, financial organizations can segment their customer base more accurately, pinpoint high-value clients, and tailor marketing efforts to specific demographics or target audiences. Additionally, AI-driven CRM systems facilitate proactive customer engagement through personalized communications, timely offers, and targeted promotions, thereby fostering increased customer loyalty and retention.

AI-driven CRM solutions boost operational efficiency within financial institutions by automating repetitive tasks, optimizing workflows, and enhancing resource allocation. By automating routine inquiries like account status checks or transaction disputes, AI-enabled CRM systems free up valuable time for customer service representatives to address more complex issues and deliver personalized support. Additionally, AI-driven predictive analytics empower financial organizations to predict customer behaviors, identify opportunities for cross-selling, and refine marketing strategies, leading to enhanced sales performance and revenue growth.

Wells Fargo executives estimate its AI-powered virtual assistant app, Fargo, is capable of handling 100 million or more customer interactions per year. While many financial services organizations are slower to adopt AI solutions, Wells Fargo is progressing quickly, training thousands of employees on generative AI solutions. Outside of the financial sector, Coca-Cola, is leveraging AI-centric CRM systems to grow its business. To enhance marketing and improve customer experiences, Coca-Cola utilized predictive customer data and analytics to garner profitable insights into customer behavior and preferences. As a result, the acclaimed beverage company created targeted marketing campaigns that boosted customer satisfaction based on their unique needs.


Challenges surrounding AI-enabled CRMs

While AI-centric capabilities offer myriad benefits, it’s important to acknowledge the challenges involved with using AI-driven CRM systems to exponentially grow a business and drive innovative product development. Cybersecurity issues concern those relying on AI functionalities to help run their businesses, especially in the financial sector. Robust security measures are essential to protecting sensitive customer data. Biased or incomplete data may produce inaccurate or skewed results. Ensuring a representative and diverse dataset is essential to avoiding biased outcomes. As technology progresses and new technologies emerge, multiple layers of regulatory compliance will become a growing consideration. Perhaps the most significant concern surrounding AI-enabled CRM is a lack of human interaction with customers. Automation can save time and reduce costs, but it does not replace the need for the human element, especially in customer service. As such, it’s essential for organizations to leverage AI to empower human employees rather than replace them.

While these challenges and obstacles may appear intimidating, proper implementation strategies and AI algorithms can ensure a successfully automated, streamlined AI-grounded infrastructure. The solution is to utilize strong and experienced developers to seamlessly incorporate generative AI into the company’s CRM systems.


Changing financial service organizations from the inside out

To successfully implement AI developments into an established business infrastructure, it is vital that the employees who are responsible for utilizing and maintaining these tools understand leadership’s overarching business goals. This demands effective, honest, and transparent communication from the top down and the bottom up. Additionally, cross-functional communication—for example, data analysts sharing insights with the marketing team to better inform campaigns—is critical to enterprise success.

Despite their capabilities, AI-driven systems aren’t effective with a “set it and forget it” approach. Systems and their performance will evolve over time. As such, it is important to continually monitor systems and adjust them as needed. This may involve refining processes, retaining models, or introducing new algorithms.

It’s essential that a growing financial enterprise is aware of its successes and improvements, especially when entering a new, AI-driven chapter. As such, it is vital to ensure the proper metrics are in place to understand and compare the growth differences before and after the AI implementation. When the entire organization successfully embraces AI systems, there are multiple benefits, including time savings for employees, increased customer growth and retention, financial profitability, and higher task completion rates.

According to a recent survey by Deloitte, 80 percent of organizations are already implementing or are likely to implement generative AI to accelerate innovation, while 96 percent are doing so to increase efficiencies. Deloitte is only one of many financial service organizations concentrating on an AI-driven future for its customer management and operational growth. The CEO’s role is to champion the establishment of AI initiatives and provide support and resources to facilitate inception. This includes obtaining sufficient funding for hardware, data needs, and governance. Without these leadership qualities, an AI-centric culture cannot be successful in today’s financial services marketplace.


The future of AI, CRM systems, and banking as a service

AI-driven CRM systems are altering the way financial service organizations view BaaS. Earlier this year, Barclays leveraged AI to enhance fraud detection and provide exceptional customer service by protecting sensitive and valuable information. The company quickly identified and prevented potentially fraudulent activity by implementing an AI system that monitors real-time payment transactions. Generative AI is continually learning and developing, and the financial services sector will improve by enhancing essential services for their clients with advanced communication, automation, and data analysis.

While there is no certainty where AI will take the business world in years to come, it is safe to say that it serves as the driving force behind the future of the tech landscape. As IT specialists and software developers continue to innovate opportunities that leverage AI’s untapped potential, the technology is revolutionizing the business infrastructure and transforming how professionals engage with consumers. By harnessing AI, financial services organizations create a highly personalized digital environment that fosters a sense of comfort and functionality that elevates the overall banking experience. By empowering customers, banking professionals can engage with them in ways they never previously thought imaginable.


About the Author

Venkata Mudumbai is an esteemed Salesforce technology architect boasting an extensive 20-year tenure within the IT industry. Throughout his career, he has spearheaded the delivery of expansive CRM projects tailored for mega-corporations. Renowned for his expertise in sales, service, and marketing applications, Mr. Mudumbai plays a pivotal role in the seamless integration of artificial intelligence into CRM applications. He holds a master’s degree in information systems and is dually certified as a Salesforce Technology Architect, exemplifying his commitment to professional excellence. For more information, contact


Disclaimer: The author is completely responsible for the content of this article. The opinions expressed are their own and do not represent IEEE’s position nor that of the Computer Society nor its Leadership.