If you've been keeping up with the news lately, you've probably noticed that AI is everywhere. From the concept of self-driving cars to newcomers like voice generation, deepfake videos, and OpenAI (Midjourney and ChatGPT), AI is changing the way we live and work. But it's not all sunshine and rainbows – there are also concerns about the ethical implications of AI, particularly when it comes to fraud. The first question we must ask ourselves is: why is AI a dangerous fraud trend in banking? AI has the power to automate and streamline banking processes, which can be exploited by fraudsters.

The banking industry has undergone significant changes that have fundamentally altered the competitive battlefield. With a focus on improving efficiencies, finding new revenue opportunities and improving the customer experience, five megatrends have arisen to impact banking in tectonic ways. They all are components of the digital banking transformation process – some being revolutionary while others are evolutions of trends already in process. In this webinar from MeridianLink, you'll learn how to deliver a world-class, omnichannel digital banking experience that's fast, responsive and frictionless. Read More about Is Your Credit Union Addressing the Digital Imperative?

Jamie Dimon, chief executive officer of JPMorgan Chase & Co., speaks virtually during a webcast ... [ ] event on a mobile phone. If you want to know which technologies will be hot in the banking industry in 2023, heed the advice of Deep Throat. In the movie All The President's Men, Woodward and Bernstein's informant--whom they refer to as Deep Throat--tells them: "Follow the money." A new study from Cornerstone Advisors, What's Going On in Banking 2023, follows the money and reveals where banks and credit unions will place their technology bets in this uncertain year. Uncertain not just because of the economic conditions, but because of the vagaries of the organizational and technological environments in which banks operate.

No two customers are alike, and each consumer expects you to know them, understand them and reward them with a level of contextual experiences that extend from product creation to service delivery… across the entire customer journey. Effectively executed, this level of personalization will support proactive engagement at the time and in the channel where the customer benefits the most. Organizations in every industry are making major investments to improve customer experiences. An estimated $6.8 trillion of direct investments in the digital experience is expected through the next two years, according to IDC, with 75% of organizations pursuing comprehensive digital transformation. Differentiating an organization requires customized solutions that can deliver contextual experiences.

"The true potential [of personalization] lies in transforming all of an organization's customer interactions by using data and analytics to anticipate individual needs, target segments of one, and build deep relationships that stand the test of time," states BCG.

The status quo in retail banking is tottering. This has forced banks and credit unions to modify their business models, re-prioritize investments, change products and services offered and ramp up innovation efforts. There has also been a rethinking of distribution options, with digital channels significantly increasing in importance. These shifts are reflected in the sixth iteration of a study of the future of retail banking conducted by The Economist Intelligence Unit, on behalf of Temenos. Until recently, the changes in consumer behavior were believed to be the primary impetus for changes in retail banking strategies.

Artificial intelligence and machine learning have become vital to many aspects of financial services, from powering chatbots to improving fraud detection. But one area where AI has not gained as much traction, particularly with community financial institutions, is in sales and marketing. Its use has been steadily ramping up, though: SouthState Bank and Eglin Federal Credit Union are among those using AI to parse data in ways that have resulted in much greater impact for their marketing efforts. Rather than targeting people based on simple demographics like age or gender, they combine internal data with information available beyond their own databases to surface a much more telling -- read: predictive -- combination of details. The key benefit has been the ability to more accurately identify when customers are ready to buy a particular financial product and deliver the appropriate messaging to them.

The use of artificial intelligence technology in banking has great potential, much of it still untapped. It's use in powering chatbots and digital assistants using natural language processing is of the best-known AI applications. AI can also be used as part of data analytics, helping banks and credit unions detect fraud more quickly on the one hand and create more personalized customer messaging and offers on the other. Significantly, AI can help make institutions -- bank and nonbank -- make faster lending decisions. However, there is downside to the use of artificial intelligence, the consequences of which loom ominously for banks and credit unions.

Throughout 2021 many banks and credit unions implemented AI and virtual agents for the first time, and many more plan to follow suit this year. While sometimes slow to adopt new technology like this, financial institutions needed to be more rigorous in their approach to problem-solving in a socially-distanced world. While AI started to permeate member-serving businesses even before COVID, its use in the financial sector is reorienting the digital trajectory of the industry as a whole. AI has allowed financial institutions to remain competitive and provide high-quality customer experiences throughout the disruption of the last two years. It is clear more than ever that member bases will continue to seek the digital-first experiences they've come to enjoy.

Using artificial intelligence and automation to digitize and upgrade banking processes is the new imperative for banks and credit unions. They have come to realize that becoming truly digital institutions requires much more than offering a mobile banking app, or turning paper files into digital files. Digital transformation requires a much more comprehensive approach. One of the most challenging areas is in lending, the bread and butter of banking. Where loan originations used to take place in a face-to-face meeting between a banker and client -- taking upwards of two to three hours (depending on the type of loan) -- they are now taking place online and on mobile phones.