THE INFLUENCE OF ARTIFICIAL INTELLIGENCE ON THE BANKING INDUSTRY
Artificial Intelligence is applicable widely across many domains, including health, banking, finance, and travel.
Artificial Intelligence is applicable widely across many domains, including health, banking, finance, and travel. It continues to get a pull through the industries that are reliant on data that all the industries encompass virtually. A report on ‘Artificial Intelligence in Banking’ prepared by IHS Markit states that by 2030, the global cost for AI can reach $300.
Artificial intelligence in the banking sector is no different for providing amazing benefits to this sector. As per a study done by PricewaterhouseCooper, 52% of the financial sector is making a good investment in AI. About 72% of business chiefs believe that Artificial Intelligence is going to be an advantage to businesses in the future. With IT in the banking industry, a large number of possibilities for development are opened up.
CONTRIBUTION OF ARTIFICIAL INTELLIGENCE TO THE BANKING SECTOR
There are many ways AI is bringing reforms in banking practices and making it easier for people. Some of the ways artificial intelligence is contributing to are Fraud detection, mobile banking, and seamless customer support.
The topmost priority for financial institutions, including banks is security as they have a constant risk of hacks and frauds. Artificial intelligence helps to reduce the rates of positives that are false, avoid fraud attempts, minimizing manual reviews of possible payment frauds. As per a recent survey, 80% of fraud experts who make use of AI-based platforms are of the opinion that Artificial Intelligence helps to minimize payment frauds and put a stop to fraud attempts. This shows how AI is helpful in mitigating payment frauds. These frauds are lessened with AI’s potential to put the light on trend-based intuition with monitored machine learning, which is combined with absolutely new knowledge attained with unsupervised machine learning. The combination of both these machine learning works to find out if it is a fraudulent transaction or not.
With technological advancement, payment fraud attack is rising in complexity. They usually have a sequence or digital footprint which makes it difficult to detect them using only predictive models. Artificial Intelligence mitigates these attacks and secures the banks. It also helps in swiftly detecting the payment frauds at a larger scale.
SEAMLESS CUSTOMER EXPERIENCE
Every business throughout the world is impacted by the experience of its customer, the same goes for the banking industry as well. This experience affects the perception of people in an organization. Specifically, for banks, people look to get access to their funds 24/7, and also want an easy and swift transaction process. Artificial Intelligence voice assistants and chatbots play a crucial role here. Chatbots don’t work for any specific time zone and this helps the customers with their queries whenever they want.
Another important thing about chatbots is that they always learn with interactions done with the previous customer, this helps them to enhance their services. Apart from it, banks are utilizing humanoids as well. One example of it is Pepper, a humanoid by Softbank. Artificial Intelligence enhances the customer experience and increases revenue in turn.
There is always a risk factor connected with customer onboarding or providing them credit cards. To reduce it, the potential customers are required to be checked thoroughly to authenticate them. With Artificial Intelligence, KYC (Know Your Customer) checks are regularly done for the client’s identification. Therefore, Artificial Intelligence provides the opportunity to save millions of dollars for banks. By employing biometric technology, including facial recognition scans, fingerprints, voice recognition, etc., banks can carry out the extra layer of security that ultimately helps to mitigate risks.
ENHANCED REGULATORY COMPLIANCE
Banks always remain under pressure from the bodies regulating them to implement the latest regulations. These are there to save banks and customers from any fraudulent activity. At the same time, it reduces finance-related crime, including tax evasion, terrorism fighting, and money laundering. Artificial intelligence in banking makes sure that banks are flexible with the recent regulations. Artificial Intelligence is dependent on cognitive fraudulent analysis that keeps an eye on the behavior of the customer, track transactions, acknowledges the doubtful activities, and evaluates the date of various compliance systems.
Businesses can stay updated with the rules and regulations by using artificial intelligence. AI systems are capable of reading compliance needs and identify the changes in them with natural language processing and deep learning. This can help banks to lead in the growing regulatory needs and align their regulations. With technologies such as deep learning, machine learning, analytics, banks can be flexible with the regulations.
Cost reduction is one of the biggest advantages of artificial intelligence in the banking industry. As per the estimations, by 2023, a sum of $447 billion would be saved using artificial intelligence. It helps banks to cut down costs in three main areas:
1. Cycle Time
A lot of time is utilized in digitizing, determining, and incorporating document templates. Automation of the entire digitization process allows banks to reduce the overall time spent. This results in greatly enhanced cycle times and the advantage of assigning employees to other important projects.
2. Error Rate
Errors are expensive and still not avoidable. As per a recent survey conducted by Netwrix, human errorsare one of the major causes of breach of financial data. The automation in the systems of banks lessens the errors to a great extent without any extra cost. Artificial Intelligence systems handle the unstructured data much better, this leads to low rates of error.
3. Solution Costs
Document digitization costs are huge. As per the data by IBM, the traditional process of onboarding can have the expense of hundreds of millions of dollars. Artificial Intelligence tools which are 80% mechanized and lead to 90% accuracy are employed to make banks able to reduce the costs connected with these onboarding process. Nearly 30 to 40% of these costs can be saved. The onboarding process powered by Artificial intelligence also lessens the error rates.
Mobile Banking is another way artificial technology is used in banking. Artificial Intelligence in mobile banking has notably reformed banking and consumer experience. Mobile banking provides 24/7 services throughout the world and also offers the luxury of ample time to bank staff to focus on more complex issues. A survey conducted by the National Business Research Institute states that 32% of financial institutions are making use of Artificial Intelligence tools such as recommendation engines, voice recognition, and predictive analytics to serve the customers with a personalized touch.
Artificial Intelligence and machine learning have impacted the banking sector deeply. With people turning more comfortable with the already in use applications, it will grow and enhance shrewdly. The banking sector is witnessing many innovations because of machine learning and artificial intelligence, and these innovations will progress continuously in the coming years.