Comprehending the role of AI within the banking domain
In the age of tech progressions, AI has taken on central importance in the playing field. Ranging from startups to MNCs, all the enterprises are integrating AI as a core aspect of their organization at a large scale.
Going by a report put out by Adobe, the share of jobs needing AI as a prerequisite has appreciated by 450% since 8 years ago, in 2013. In the digital age, with all industries prone to disruption by tech progression it becomes more and more vital that consumers get a streamlined and seamless experience for their banking process.
Ever since the growth in the working populace and appreciation in disposable income are functioning as catalysts for enhancing the demand for digital banking. In this blog by AICorespot, you will get to know about the role of Artificial Intelligence, and how it is assisting the banking domain.
- The growth within the working populace and appreciation in disposable income is functioning as a catalyst for enhancing the demand for digital banking.
- 54% of financial services enterprises with more than 5k staff members have taken up AI.
- Some of the benefits of Artificial Intelligence adoption within the banking sector consists of Risk Management, Fraud Detection, enhanced Client Service Experience, Quick Resolution Time and Digitization.
Integration of AI within the banking domain
Artificial intelligence has revolutionized the banking domain with its offerings, products, and services. Just a while back, your closest grocer was only using cash as a means of payment. Currently you will observe that QR scanners for internet transactions at nearly every store you go to, which informs us that technology adoption is occurring at a swift pace owing to increased internet and broadband penetration.
India documented an internet penetration of 41% this year. Going by a report dated 2016, a ton of banks have partnered with Fintech startups to furnish innovative solutions and a streamlined, seamless banking experience to the clientele.
Going by a report put out by the Economist Intelligence Unit, 54% of financial services enterprises with more than 5k staff members have taken up artificial intelligence. Although artificial intelligence puts forth a massive opportunity for the banking domain to amp up its game, we are still in the phase of taking baby steps.
Variants of Artificial Intelligence
Even though there are seven differing variations of artificial intelligence, Artificial Intelligence can be widely categorized into two variants, specifically:
- Weak AI
- Strong AI
Weak AI is the variant of Artificial Intelligence that is mainly harnessed to carry out a task to solve a particular issue. These smart systems are inputted with pre-defined sets of functions to carry out a specific task in an intelligent fashion.
Thus, they are referred to as Weak AI or Narrow AI.
While, on the other side of things, Strong AI is the variant of artificial intelligence, which in layman’s terms, broadly developed to mimic the human being’s brain.
This implies that it has been developed in such a fashion that it can execute any task that an actual human agent can.
Benefits of AI within the banking domain
Thus far, we have comprehended the adoption of Artificial Intelligence in the Banking sector. Currently, let’s comprehend the several advantages Artificial Intelligence can offer to this domain in this section.
- Risk management: One of the most crucial aspects of dealing with banking is Risk Management. Credit Risk Management is a scenario when the borrower does not make prompt repayment of the loan and the other contractual obligations with the expected time frame. AI will assist with this aspect as Artificial Intelligence will assist in tracking mobile banking applications to undertake tracking and analysis of how a user is managing their finances. This will ultimately assist the bank to comprehend the risks connected with authorization of loans to people and other credit risk management.
- Fraud detection: Each year, we are bombarded with updates regarding scams and other financial scams worth millions and millions of dollars. With tech progression, even the malicious actors are discovering novel ways to get their way through and fool or crack the system. Thus, to make sure that we minimize the proportion of frauds that occur, the banking domain has begun leveraging ML-based Fraud Analytics. Machine learning functions on the notion of “learning from experience”. Through the leveraging of ML algorithms, machines can undergo training to identify the difference between authentic and fraudulent transactions. This will eventually assist in averting any type of abnormal activities from occurring.
- Streamlined client experience: AI within banking provides a streamlined and seamless client experience through Personal Finance with intelligent features like chatbots, subscription services, and personalized notifications. With the assistance of chatbots, clients can easily be helped for queries with regards to historical transactions, spends analysis, savings, and finance-connected data regardless of Bank closure or National Holidays. The immediate dissemination of data will not just assist saving time but also assist the client to comprehend the products and services offered by the bank in an improved manner.
- Digitization of the procedure: With the growth of internet penetration throughout the nation, digitization of the banking process is turning into a prerequisite. One of the major challenges that can find resolution via the digitization of the banking process is averting the hassle of standing in huge queues for getting the banking work done by making most of the processes “paperless”. One of the most widespread initiatives is the Know Your Customer (KYC) registration procedure which has become fully online now.
- Swift Resolution Time: Artificial intelligence-driven chatbots are assisting the banking domain in a huge way by minimizing the operational expenditure and improving the client experience with swift resolution times. Till now, artificial intelligence chatbots operate on the notion of “learning from experience” which assists in minimizing human errors by a massive percentage.
In the digital age, “data” is the most critical variant of currency. With so much of data available at your disposal, at every juncture, it becomes more and more critical for enterprises to leverage it efficiently and effectively.
The tech that is creating shockwaves in the Fintech industry at the present moment is Artificial Intelligence. AI is furnishing financial enterprises with a platform to assist people, data and services operate in a consistent fashion.
The role of artificial intelligence within banking is obtaining prominence on an ongoing basis and the international expenditure on AI is forecasted to touch $300 billion by 9 years from now, in 2030.