5 applications of Artificial Intelligence in Banking

AI is a relatively new technology for most of us, but did you know that it was first conceptualized back in the 1950s; 1955 to be precise?

It all began as a branch of Computer Science aimed at producing “intelligent machines” with the ability to imitate human cognitive skills, learning, and problem-solving capabilities. ?

AI is projected to bring about radical changes in industries across the spectrum. ?

It is anticipated that AI will finally be able to solve those problems that are still not beyond what present technology can achieve.?

Globally, governments and corporates are fervently investing in AI technology research and pilot applications that can solve real-world challenges.??

Banking is not immune to these changes. AI can make banking processes simpler, quicker, and seamless than ever before.?

Leveraging digital payments, Artificial Intelligence bots, biometric fraud detection and reduction systems can result in enhancing the quality of services offered, and reach a broader range of customers. ?

AI is not a stand-alone technology, it is a complete set of myriad technologies, including ML, Natural Language Processing, Vision, Speech, Robotics and much more. ?

The pandemic only spurred the need for greater AI adoption. When businesses realized AI’s potency to enhance the efficiency and effectiveness of operations, there was a greater acceptance across various verticals. ?

The Major 5 Applications of AI in banking are listed below. Let’s see them each one by one?

Chatbot or Customer Engagement?

Oftentimes, navigating a particular website or application can be tricky. Not all websites are optimized to be user-friendly. In these situations, chatbots come to the rescue. They are the most commonly used AI across various verticals and there is a reason for this. Chatbots or customer engagement services deliver the highest ROI in terms of cost savings. ?

Chatbots address a user’s most commonly accessed activities and queries like balance inquiries or mini statements, or fund transfers.?

When chatbots handle these tasks, it reduces the traffic in internet banking or contact centers, thus improving the overall efficiency of the entire process and alleviating users’ concerns promptly.?

?Robo Advice?

Now, unlike chatbots, Robo Advice is not as popular. It still is nothing short of a controversy. So, what a Robo advisor does is combs through all data and analyzes it and offers valuable financial health advice, along with financial history. ?

It can also give insightful investment recommendations to a client based on the client’s goals and preferences. ?

?Business Analytics?

Broadly applied predictions based on available data and analytics is another common use of AI. Ai is empowered to identify patterns and correlations. This was hitherto impossible with legacy technology. Understanding these patterns can aid in realizing greater business and sales opportunities, which could either be cross-selling or sometimes metrics that lead to direct revenue generation.?

?Cyber Security?

Cybersecurity is the most talked about in today’s digital era, and rightly so. With online banking and digital payments going uphill, digital space has to be kept safe and secure. Now, AI can help in keeping cyber fraudsters at bay. By leveraging enough data from threats and attacks previously survived, AI can discern patterns and indicators to parry such attacks in the future. AI can also ward off internal data breaches and the cherry on top. It can suggest preemptive measures thus mitigating data theft or misuse.?

?Credit Score/ Direct Lending?

?Lending loans require a thorough vetting process. Accessing the creditworthiness of applicants can be a hassle. This can be done by using data from several traditional and non-traditional sources. Thus, with the help of AI, lenders can create a robust credit scoring system with easy access to credit history. ?

That's all for this week.

Subscribe Abzer's Fintech Newsletter and stay updated with Everything Fintech!