What are the Application of AI in Banking?
For Artificial Intelligence, banking is like an ocean of opportunity. Some of these applications are briefly described below. For the ease of understanding, these applications are divided into their subcategories. These applications and subcategories areBusiness Process Management at Back-End
1. Human Resource Related Services
Artificial Intelligence in banking can be used for handling primary stage tasks related to hiring such as engaging with recruits, initial stage filtering using social media analytics, pre-screening the candidates over chat risk Analysis.
2. R&D of Investment Related Services
There are so many repetitive back-end tasks. Using software robots for handling such tasks can be a good option which can not only save time, but this idea can provide excellent efficiency and accuracy.
3. Algorithmic Trading
There are so many algorithmic solutions which are used for handling high-frequency trading where data is imported from various financial markets and based on this data several investment decisions are made in milliseconds.
4. Robotic Process Automation
Cognitive computing is the future of Robotic Process Automation.
5. Insurance Under-Writing
Using Artificial Intelligence for handling Insurance-related tasks such as risk assessment accuracy measures and predicting the premium to be paid by a customer.
Privacy, Security and Compliance
1. Scam & Fraud Detection and their Prevention
Using machine learning (a subset of AI) scam and fraud detection is very much comfortable now unlike the measures used in the past.
2. Compliance Monitoring
The use of AI reduces the time taken to examine the lengthy documents and marking the potential issues, and now it is possible in seconds as compared to hours previously.
CRM, Marketing and Customer Support
1. Chatbots or Voicebots Services
Chatbots and voice bots are famous now, and more advanced version of chatbots are coming now known as Co-bots (chatbots with cognitive capabilities ).
2. Smart Wallets
E-wallets with quick and intelligence capability such as using fingerprint scanning for security purpose which made easy as well as secure.
3. Personalized Financial Services
Bots with Intelligence capability are also used for managing customer targets. Such as recommending stocks or bonds.
4. Robotic Process for Handling Financial Products
Financial Products can be handled using robots with zero human intervention.
Enabling Artificial Intelligence in Indian Banks
India is on the track of becoming a global hub of technology. The Banking sector of India is also adopting Artificial Intelligence and its techniques. Let's consider some examples of the same - State Bank of India (SBI) has already built a solution based on Artificial Intelligence, which is developed by a team (winner of the first hackathon arranged by SBI). From the words of Sudin Baraokar, SBI's innovation head - "The solution essentially scans cameras installed in the branch and captures the facial expressions of the customers and immediately reports whether the customer is happy or sad - this is real-time or near real-time feedback." Senseforth AI Research for HDFC Bank has developed a chatbot based on AI "Eva." The full form of Eva is Electronic Virtual Assistant.
According to HDFC, Eva has already addressed 2.7 million plus queries come from 530 k users. In the quest of launching AI-based chatbot, ICICI bank is not lacking behind in any manner. The chatbot which is launched by ICICI bank in February already answered about 6 million queries and maintaining a reasonable accuracy rate of 90 percent. This chatbot is known as iPal. Not only Indian Bank, but international financial institutes such JPMorgan Chase and Wells Fargo also investing some of their budgets in AI. In 2017, JPMorgan invested 3 billion USD in new initiatives, such as AI.
What are the Best Practices for AI in Banking?
The best practices for AI in Banking are listed below:
-
Understanding the Specific Problem by Identifying the Particular Business needs - It is necessary to know what the business needs. First, Artificial intelligence can provide different solutions for the same problem, but it is essential to see the disease before prescribing any medicine.
-
Develop a Management Strategy for Handling Data - Banking is a field where there is no scarcity of data. In fact, in banking how to process an enormous amount of data is a problem. So it is better to maintain management planning to clean, extract and centralize the data after that data should be structured into a form which is understandable by AI.
-
Giving the time to AI for Self-learning - Learning is the most critical aspect of any AI technology. AI is a technology which requires a lot of learning to deliver a good result; it is not a software program which will provide excellent results as soon as it is deployed. It has a requirement to be fed on historical data and to train itself. This can be time-consuming.
-
Automating the Testing Continuously - Having correct results in the development phase by AI does not ensure that it will give accurate results in production also. It can provide undesired effects on the actual data. That is why it is essential to set up a mechanism of continuous testing for an AI.
-
Maintain the Correct Mathematical Spirits of the Solution - The solution provided by an AI should be mathematically as well as practically right.
Benefits of Artificial Intelligence in Banking Sectors
1. Operational Efficiency and Risk Reduction
AI streamlines processes, cutting down operational costs while minimizing the potential for human errors, thus enhancing risk management.
2. Elevated Customer Experience
Through AI-powered chatbots and virtual assistants, banks can offer personalized product recommendations, exclusive offers, and tailored services, thereby enriching the overall customer experience.
3. Fraud Detection and Security EnhancementAI enables real-time identification and prevention of fraudulent activities, bolstering security measures to safeguard both financial institutions and their customers.
4. Regulatory Compliance AutomationAI assists in automating processes, ensuring adherence to regulatory standards and mitigating the risk of major defaults, thus helping banks to comply with industry regulations effectively.
5. Enhanced Operations and Cost ReductionBy optimizing operations, reducing expenses, and automating compliance procedures, AI contributes to enhanced efficiency, lowered risk, and quicker decision-making within banking institutions.
6. Improved Decision-Making ProcessesLeveraging AI-driven insights, banks can make better-informed decisions, streamline operations, and further enhance cost efficiency, ultimately fostering improved operational outcomes.
What are the Challenges for Enabling AI in Banking?
The main challenge for the development of an AI solution is the availability of the right kind of data. Data acts as fuel for the machinery of AI. Though in the field of Banking the availability of data is sufficient in most of the cases still it appears to be a challenge for applying AI in the banking sector. The next challenge comes after the availability of data is its privacy and security. In the technological world of Banking, the security of data demands as much concern as the security of any treasure needs.
Artificial Intelligence implementation requires privacy policy like GDPR (General Data Protection Regulation), which is introduced by Europe for its citizens. The next big challenge is the lack of human resources. It is already stated above that AI now is in the teenage stage but AI still lacks in the capable hands which can handle the core technologies in right and efficient manner. The threat to the employment generated by the use of Artificial Intelligence is another challenge. Though AI opened the door for new job opportunities such as Data Science and Data Engineering, on the other hand, it is also true that the adaptation of AI may also cause an unemployment problem in the sector.
360 Degree Finance Approach
Artificial intelligence is helping banks become more efficient in the process of detecting fraud and Robotic Process Automation. For Adopting this approach, we recommend taking the following steps -- Know more about Credit Fraud Detection with Deep Learning
- Learn More About our Banking Financial Technology Solutions