AI In Banking
The world is evolving constantly, courtesy of the technologies that are changing our daily lives. We have assimilated a host of advanced technologies into our lives that enable us to connect with anyone from anywhere, make payments without exchanging hard cash, experience any moment or place virtually at the convenience of our home and operate our household appliances and other devices with simple voice commands.
Today, we are seeing a spate of new disruptive technologies like Artificial Intelligence (AI), blockchain, Internet of Things (IoT), big data and 3D printing among several others. The capabilities and benefits of these technologies have lured the most rigid industries into adopting them to enhance the way they function. Banking is one such industry.
AI Penetrates Banking
As customers shift to digital solutions, more and more banks are now adopting technologies like AI and big data to improve their services and make them more aligned with the requirements of today’s tech-savvy consumers.
AI is being adopted across the front office, mid-office and back-office operations of the banks. Today, the majority of banks are using AI-powered solutions for front-office applications. Chatbots are being used increasingly to respond to customer queries and guide them through everyday banking tasks. According to a report by Business Insider Intelligence, front- and middle-office AI applications allow the banks to realise the highest cost-saving opportunities. When it comes to front-office applications, banks are using AI-based solutions to make customer identification and authentication processes more seamless and chatbots to improve customer engagement and experience and offer them with more personalised services, without human intervention.
Banks are also deploying AI across middle-office functions to sift through the available data, analyse and predict customer behaviour, and identify and prevent money laundering, payment frauds and other fraudulent activities that can cost the banks dearly.
Apart from these, AI has other applications too across the banking segment, like predicting future trends by analysing huge silos of available data on customer transactions, market conditions and other essential indicators. They can also study the ongoing transactions and project a customer’s current requirements. For example. AI can monitor a customer’s daily transactions and if it notices that the maturity date of a Fixed Deposit is nearing then it can recommend certain investment options or propose loan options if it notices untimely liquidation of Fixed Deposits.
AI can also automate several information-intensive banking services where even a slight error can lead to costly damages. AI can facilitate cognitive process automation to automate error-prone and costly functions like claims management.
There are other potential applications. AI-based solutions can also be used by the banks for recruitment, training and other human resources management functions as well as for audits.
AI-based security solutions can also help in preventing and protecting against cyber-attacks by taking timely measures. Companies like Darktrace offer AI-based cybersecurity products that can detect anomalies in the banking system and processes and notify the authorities about a breach or a possible intrusion attempt in a timely manner.
Future of Banking with AI
Enhanced customer engagement and experience, improvement in operational and cost efficiencies, and protection against costly frauds and cyberattacks have encouraged several banking and financial institutions to embrace AI.
A report by UBS Evidence Lab suggests that 75% of banks with assets worth above $100 billion are now deploying AI strategies. This indicates the growing preference for AI-based solutions among banking institutions.
These efforts will surely bear fruits, as indicated by another research by Autonomous Next that suggests that banks could potentially save an estimated $447 billion in costs by 2023 by using AI, with front- and middle-office applications accounting for $416 billion of the overall cost savings.
Evidence of a great future for the banking industry with AI cannot be emphasised enough.