Artificial Intelligence, also known as AI or machine learning, is a rapidly developing technology that is revolutionizing all the top sectors and industries in the global economy. If we have to pick industries that are benefiting the most out of this technological trend, then the banking and the financial industry tops the charts. The adoption of software IoT and chatbots have transformed the face of the banking industry and the impact can be felt widely, among the employees and the customers.
To meet the needs of improved customer experience, customer service, risk management, fraud detection and prevention, wealth management, trading and cybersecurity, and other business processes have been simplified by the adoption of the latest technology of artificial intelligence in banking and finance industry. Today, various tools and applications of AI such as robots, chatbots, virtual assistants, AI platforms, and more have become an integral part of banking, investment, and insurance industry and it has replaced the traditional methods of handling money with the modern methods.
What is Artificial Intelligence?
Artificial Intelligence is the technology that has emerged to fulfill the needs and desires of the human to create machines or software that demonstrate intelligence and other capabilities similar to human beings. This technology helps in accomplishing redundant, repetitive, time-consuming, monotonous tasks to reduce human effort, decrease the chances of error and achieve higher-level of accuracy.
It is technology that took birth in the area of computer science and uses the implementation of several other branches of the scientific field. Experts are constantly exploring the potential of the technology to imitate human skills. So far, there is a multitude of cognitive capabilities that a typical artificial intelligence model can display. These capabilities include speech recognition, language recognition, decision making, problem-solving, Q&A, manipulation, and recording of data and objects, learning, planning, reasoning, mathematical calculations and more.
There are several branches of AI that are used for the implementation of an AI model in any industry. There is a huge list of these branches that include knowledge engineering, machine learning, natural language processing, computer vision, deep learning, robotics, automatic programming, natural language generation, virtual personal assistants, social network analysis, internet of things, translation, simulation modeling to name a few.
Use of Artificial Intelligence in Banking
You would be surprised to know that humans have been trying to explore this idea since the ancient Greek period. Ancient Greek myths of Hephaestus and Pygmalion is the first mention of this technology of intelligent robots and artificial beings like Talos and Pandora.
In the modern era, the research and development of the technology goes back to the early 1900s. However, the investment and growth of the field grew during the 80s. The use of AI in the banking sector in the USA can be traced back to 1987. At this time, Security Pacific National Bank created a specialized Fraud Prevention Taskforce to investigate the unlawful use of debit cards.
Today, the use of AI in banks has widened the gamut of financial services and products they have to offer their clients. Apart from this, they use for organized operations, maintain bookkeeping, provide excellent customer service and experience, offer customized financial solutions, financial trading, and prevent fraud.
Customer services have improved tremendously ever since the banks have decided to adopt technological tools likes chatbots. Today, banks are able to fulfill the needs and expectations of each customer.
Machine learning allows banks to understand the need of each individual customer by analyzing their behavior, account activity, feedback and more.
In addition, it enables them to provide customized solutions suiting the demands of each individual customer.
Automated customer support system lets the customer and the bank interact with each other round the clock. Besides the technology has provided 24/7 access to their accounts that makes customers feel secure.
Application of AI in banking and financial industry has earned them the powerful tool for efficient risk management by implementing predictive analysis to large data efficiently.
Customization of financial services is now possible as AI can interpret and analyze large-volume of data easily. It provides automated financial planners and advisors to each customer helping them make better financial decisions.
AI software and machine learning offer greater security when compared to complex IT security platforms. Banks and financial institutions are at the highest risk of cyber-attacks and hacking. AI follows a proactive and predictive approach to secure the systems. With the help of wider knowledge of human psychology and behavior patterns, it ensures higher levels of security and compliance of regulations and security measures.
Not to forget, the most revolutionary change in the banking industry, the digitization of banks, can be largely attributed to AI and computing technology. AI in the banking sector made the elaborate process easier and quicker. It created a platform for the big transition without disrupting the existing systems and records.
Take note that these are just a few uses of AI in the banking and financial sector. Apart from this, the use of AI has enhanced the productivity and efficiency of banking employees. It has enhanced data quality and contributes to business acceleration. We have all automated responses and use voice-assisted banking. These are a few other examples of the application of AI in banking.
Future of Artificial Intelligence in Banking
Though in its nascent stages, Artificial Intelligence is considered to be the future. According to the Accenture Banking Technology Vision 2018 report, A whopping 83% of Indian Bankers have faith in its potential and believe that AI will work alongside humans in the coming years.
Their research shows that AI can add nearly $1trillion to the Indian Economy by 2035. Many companies and industries are heavily investing in the technology to bring the change in how we bank, invest and insure.