Conceptualizing the Use of Artificial Intelligence in Customer Relationship Management and Quality of Services: A Digital Disruption in the Indian Banking System

Introduction

India has witnessed waves of technological disruptions eased by the advancement of Information and Technology (IT) sector, covering vast ecosystem under the digital platform of over 700 million internet users, making as world’s second largest country in digitalization. One such outcome of technological innovation and digitization is the emergence of Artificial Intelligence (AI) and adoption of the same in different sectors of the economy. As we know that there the use of artificial intelligence (AI) by organizations including the government institutions is on the rise for dealing with governance mechanisms in the deployment of qualitative and efficient services. Indeed, most of the industries are aware about the concept of artificial intelligence and potentials of such technology, recognizing that if firms do not deploy such highly skilled technologies within the short span of one to two years; such firms will face difficulty to compete with their counterparts in the years to come who will offer the value added services. Banking industry has been gradually adopting the new technology in the form of digital mode of banking, financial innovations under digitalization reforms and working jointly with the FinTech firms in the delivery of services and products. However, banking industry has a very specific feature given its complex and heterogeneous products & services which covers multiple groups of heterogeneous customer data, which requires high degree of compliance for a smooth regulatory framework. It is thus imperative to understand the regulatory expectations around the use of AI for its implementation and monitoring as a first step if firms are to fully exploit the potential of AI and machine learning (ML) technology, in a sustainable and operationally resilient manner (PWC, 2019).

Over the period, the Reserve Bank of India have geared towards developing efficient and secure payment and settlement systems with focus on their greater penetration through availability of user-friendly platforms at affordable cost (RBI, 2020). The Indian banking industry has been in the forefront of adoption of newer technologies to redefine more sophisticated and qualitative services to the customers. Banks have been significantly improving the use of technology in the form of user interfaces, multiple delivery channels, payment gateways, dashboards, core banking solutions and internal control mechanisms for protection so as to increase the overall operational efficiency. Above these, use of AI-powered platforms reduces costs or production in terms of data storage and processing, which makes easier for banks to connect and access across time and space. The outcome of the use of these services has brought higher automation and improvement in quality of human decision making in terms of speed as well as accuracy to reduce and mitigate the inherent risks involved. In other words, the use of artificial intelligence technologies can dramatically improve banks’ ability to achieve four key outcomes viz., higher profits; at-scale personalization; rapid innovation cycles; strategic CRM and distinctive Omni-channel experiences. For example, the deployment of AI is now taking place to help categorize different payments, offer a source of advice and a resource for answering queries via chat bots and provide suggestions to customers based on their spending history. Indian banks have already started on their journey to use of artificial intelligence and most of the banks have experienced improvements in better customer engagement, higher competitiveness, accelerated innovation, higher margins and improved business intelligence, among others and hence aggregate potential cost savings for banks from application of such artificial intelligence in front, middle and back offices estimated at USD 447 billion by the year 2023 (IDRBT, 2020).