Most of us, if not all, know that banking refers to the entire range of varied activities related to banks. At the same time, Artificial Intelligence or AI is the present obsession with computer science. Basically, it’s a branch of computer sciences, dealing with the development and production of intelligent or smart machines.
In recent times, AI has been a boon for every major industry ranging from mining to the service industry. In this article, let us explore the ways in which artificial intelligence has transformed the financial sector from within.
How Artificial Intelligence (AI) & Banking are related?
With the increase in AI’s popularity, both the public and the private sector have invested a lot in this field. As a matter of fact, the banking sector hasn’t been excluded from this drive for providing AI-based services.
According to reports, AI is expected to boost banking sector revenues by more than 30% by 2022. Presently, most of the top bosses in the financial sector consider AI as a tool for achieving competitive advantages. As of now, more than half the banking sector has already invested in AI. The remaining is expected to do the same by 2020.
In fact, the banking sector was probably the first service sector industry which started making regular use of AI. However, the use of AI in banking had hitherto been limited only to a few special areas.
Now, with the boom in the AI technology, the financial sector is making a much-varied use of the AI. This rise in the use of AI is also, obviously, related to the increase in investments by the financial sector.
One way or the other, AI has revolutionized banking (both for customers and the authorities) in many, previously unthinkable, ways.
How can Artificial Intelligence (AI) Influence the Banking Services?
As I have already mentioned, AI has transformed the banking system in a multitude of ways. In this section, let us explore some of the most significant ways in which AI has made banking better.
1. Customer Service Automation
Sometimes or the other, we have all spoken with a robot over the telephone. This is a classic instance of the implementation of AI to provided automated customer services. With the development of AI, automated voice and chatbots have taken a lot of weight off the human shoulders.
For the banks, the use of AI has resulted in a significant reduction in production costs, as well as, the overhead charges. Owing to AI, the banking sector is expected to save $450 billion by 2030.
However, such a saving comes at the price of 1.2 million workers, who are most likely to lose their jobs to robots. In this context, please note that the AI system functions optimally only when it’s used to complement humane activities.
Without the help of AI, banks are incapable of using the customer data available with them to provide personalized services. Making a customer’s profile which could then be used to provide services involves tremendous amounts of the data analysis.
Provided the steady growth in customer on boarding, it is rather impossible for any human to take care of these. Herein comes the Artificial Intelligence (AI) to the rescue.
Artificial Intelligence (AI), especially machine learning, is fully capable of accessing information from multiple databases and thereby analyzing the same. Thus, AI has allowed banks to create nuanced customer profiles, which do wonders in terms of personalization of services.
When it comes to money and banking, personalization is not enough. Customers need to know that their money is safe. Consequently, security is a major concern for the banking industry.
In this regard, the advent of AI technologies like biometrics has taken customer authentication to a whole new level. Working alongside passwords and signatures, biometrics has strengthened the process of identification.
In recent times, there have also been developments in the field of AI-based facial recognition. In time, this is also expected to be used in the banking sector.
4. Process optimization
In terms of the internal functioning of banks, the implementation of AI allows the optimization of high-volume, low-value processes. These processes involve internal IT requests or even the procedure for changing employee passwords and so on.
All of these processes can be effectively handled by bots, resulting in a huge cost cut for the organizations.
5. Prevention of fraud
The ability to prevent cybercrimes is probably one the best things that AI can do for the banking sector. In order to recognize the patterns of the fraud processes, a huge amount of data has to be analyzed. This is done with the help of AI, resulting in an efficiency which cannot be attained by humans.
Artificial Intelligence (AI) is a boon that the banking sector is already embracing. As of now, Artificial Intelligence is only in its nascent stage. By the time it evolves, it is expected to make banking all the easier and advanced.