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Rory Brown, Managing Partner of Nicklaus Brown & Co., Talks How AI Is Redefining the Virtual Bank Market 

Originally published on connectioncafe.com

Internet-only virtual banks have had an ace up their sleeves since their beginning that they’re only now beginning to exploit. Due to the online nature of virtual banking, large amounts of customer data can be easily collected about their behaviors, transactions, preferences, and more.

With the inclusion of AI and biometrics, a virtual bank can now leverage this dense stream of customer data to deliver new levels of value to the customer, create interesting synergies, and then lock it all down so that the data is securely protected.

AI Allows Deep Insights For Banks and Their Customers

Banking, investing, and other financial activities create large streams of data. Think about every transaction you make using your credit and debit cards, as well as every bill you pay and every withdrawal and transfer you make. This transaction history produces a massive pool of data too large for even the smartest of us to pore through looking for patterns. But artificial intelligence can pull useful insights in seconds, from even the densest of data collections.

As a result, the use of AI by virtual banks is set to redefine what a bank can do for its customers. Artificial intelligence can identify spending patterns that are out of the ordinary, catching fraud before customers are aware of the problem. AI can also examine a customer's transaction history and make suggestions on what customers can do better to reach specific goals.

For the bank, AI allows a level of focused support that doesn’t require human intervention, providing great customer attention while reducing costs. It can also create profiles based on customers’ spending habits to allow targeted offers likely to be of interest to specific classes of customers.

Biometrics Takes Security to the Next Level

Passwords, once the gold standard for internet security, are reaching the end of their useful life. Advances in computing power are making it increasingly easy to crack passwords using brute force methods. Additionally, the frequency of major data breaches is increasing, releasing an untold number of compromised user credentials into the hands of criminals.

Biometrics elevates security using bits of ourselves that are very difficult to recreate. Fingerprint scanners on mobile devices are increasingly getting wrapped into mobile banking apps, allowing customers to log in quickly and securely. Facial recognition, voice authentication, and iris scanning are also on the rise in virtual bank apps. These technologies allow customers to secure their sensitive banking data, and keep criminals out of their accounts, without the need for outdated passwords.

In the future, look for AI and biometrics to begin working together to create a complete biometric and behavioral profile of customers that is extremely predictive, and useful as a total security package to keep data where it should be.

About: Mr. Rory Brown has focused on financial technology and investment management for 30+ years. Rory Brown is currently working on a new app that will help consumers navigate online banking. The app will connect clients with the best virtual banks in the world, where they can get comparisons on rates for home loans, auto loans, and more.

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