Over the past few years, Artificial Intelligence (AI) has made the transition from the realm of science fiction into reality.
From being a fantastical impossibility to being a part of all digital platforms and transactions, AI has come a long way. It has evolved and matured along the way. It is now a part of our everyday lives. If you think you haven’t encountered AI in your life, think again.
AI is not sentient robots and creepy security systems like they show in the movies. It is more about automating tasks that would otherwise need human intervention. For example, AI in banking has made great strides in automating customer support systems. Smart bots pre-programmed with templated responses are making lives easier for banks and their customers by reducing the wait time for simple queries. Artificial intelligence in banking is the perfect use case for showcasing the strides AI has made.
AI in financial services makes sense because it is already redefining the banking sector. Apart from the chatbots, voice recognition, and recommendation, engines are already playing their part in making banking more efficient.
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AI is expected to save the banking sector around $1 trillion by the end of the year 2030! That’s a significant number. AI bots, digital payment advisers, and biometric fraud detection mechanisms are only a part of AI’s repertoire. Here are six ways in which AI is redefining the banking sector.
Impact Assessment of Artificial Intelligence in Banking
1. Enriched customer engagement
The strongest argument in favor of banks using AI is the rich customer engagement that it enables. It allows banks to customize their offerings based on their customers’ usage and spending patterns. It also helps banks build stronger customer relationships through intuitive interactions. On the other end, customers can easily access the information they need without having to visit a branch.
2. Enhanced fraud detection and prevention
As banking is going digital, security is becoming a prime consideration for banks. Working on a set of robust pre-defined rules, AI in banking can detect fraudulent transactions and suspicious activities as they occur, leveraging real-time analysis.
AI not only helps alleviate the risks but also improves security as it learns from every fraud and security breach it encounters.
3. Automated processes
Banking is all about repetitive processes happening in an efficient manner. Many non-critical processes, such as addressing simple queries, tie up precious human resources.
AI can easily take over such processes and introduce automation to improve productivity and free up human resources for more crucial operations that require human intervention and skills.
4. Improved decision making and risk management
One of a bank’s foremost functions is giving loans. Risk assessment is a large part of that function to protect the bank’s interests.
It is an involved process that includes doing background checks of the borrower along with their credit eligibility. AI can take over the process from end to end and introduce more efficiency in decision-making and risk management.
5. More efficient support
Almost 90% of bank customer queries are related to procedures, requiring a set, step-by-step checklist. Such queries are repetitive in nature, and the support executive handling them could easily make mistakes due to fatigue.
A chatbot is more efficient in handling such queries as it can keep answering them with unerring accuracy every time.
6. Increased cost-efficiency
Perhaps the biggest advantage of AI is cost-efficiency. The costs of incorporating Artificial Intelligence into a system have drastically come down over the years.
A well-configured AI system can even execute complex processes and do so accurately and tirelessly. It can bring down operational costs by a significant margin and introduce increased cost efficiency in banking processes.
Artificial Intelligence is cutting-edge technology. It has matured over the years but is still evolving and getting better. AI is going mainstream and is set to become a crucial cog in the complex banking machinery.