For the past several years there has been an internal debate within the global banking industry regarding the efficacy of migrating to fintech, the next generation of automated solutions that incorporate new technologies, such as artificial intelligence. The debate is now officially over. Fintech has won.
That’s the obvious conclusion to be drawn from data recently
released by the deVere Group, one of the world’s preeminent financial advisory
firms. Having polled bank customers in Europe, Asia, Africa, Latin America, and
Oceania, deVere found that some 55 percent of them acknowledged that they
already use fintech solutions to access and manage their accounts.
That being the case, there’s no going back. Fintech is here,
it works and it’s being warmly received by bank customers. Bank executives will
inevitably respond to this new reality by accelerating their roll out of
additional fintech solutions in order to compete in an open market increasingly
characterized by competition from digital currencies, so-called “challenger
Of course, accessing and managing accounts is only the
beginning. The ease that provides consumers is significant to be sure, but it only
scratches the surface of the changes that fintech will bring to banking.
Fintech will drastically upgrade customer service throughout the banking
A Case Study: Dispute Resolution
Take, for example, the credit card dispute resolution process.
If you purchase goods or services that are not provided by the merchant as
ordered, you can apply for a chargeback with the bank that issued you the card.
By all accounts, the dispute resolution process is regarded by most cardholders
who have endured it as agonizing, bureaucratic and subjective. The reason is
that unlike so many other bank procedures, the technology used in dispute
processing hasn’t been upgraded in decades. Moreover, it is largely handled
manually. The dispute’s outcome depends entirely on the bank employee who
handles the case.
We have documented repeated cases, for example, of two
identical chargeback requests regarding the same type of purchase from the same
merchant filed by the same cardholder at the same bank handled by two different
dispute representatives. Yet one is approved and the other is rejected. The
only explanation for such erratic decision making is that the decision making
is not based on the documentary evidence alone but is also subject to the whim
of a single individual.
Introducing Artificial Intelligence
That’s why we at Finscend decided to develop a fintech
solution for dispute resolution that would revamp the entire process from A to
Z. The result was our unique Bank Dispute Platform (BDP), powered by artificial
intelligence (AI), which objectifies procedures by removing the human element
from the equation. The AI engine utilizes hundreds of data points and variables
to produce a “Dispute or Not” (DoN) score, a powerful and predictive analytical
tool that recommends an appropriate action ̶
for example, whether the dispute should be raised or denied. BDP
integrates seamlessly with the bank’s existing ecosystem. Moreover, many AI
engine variables can be configured to meet the specific requirements of the
As a result, dispute resolution time can be cut in half.
That alone will amaze cardholders and certainly improve customer satisfaction,
a critical element in guaranteeing any bank’s standing in today’s market.
No less important, however, is that BDP will also slash bank
operating expenses. Worldwide, the financial service industry currently spends $15
billion annually in order to resolve $65 billion in credit card disputes. Much
of the cost results from inefficiencies, fraud and abuse. These problems can be
mitigated by the deep analytics generated by the AI engine. By animating obsolete
technology and manual methodology, we estimate that BDP can reduce costs by at
least $4 billion.
And that’s just what we can do. All told, there are more
than 12,000 fintech start-ups worldwide. Banking as we’ve come to know it is
about to undergo a major transformation.