Compiled by Khushi Tekwani
AI has become the new norm and a vital component of an increasing number of sectors. Several business owners and executives have begun to consider the future and are actively exploring the use of AI in finance and other fields to gain a competitive edge in the marketplace.
The financial department has undergone significant development during the previous two decades. AI has spawned the FinTech industry, transforming digital transactions and data collection into a new way of life. This emergence of AI in the financial sector demonstrates how rapidly it is gaining acceptance and altering the corporate landscape, even in traditionally conservative sectors.
Growth of Artificial Intelligence in Finance Industry
Starting with the example of credit cards, when a consumer requests a credit card from a bank, the bank must currently verify the customer’s eligibility. For simplicity’s sake, banks give customers their credit scores. In the financial industry, the credit score functions as a tool that informs banking personnel about the number of existing loans, credit cards, etc. In addition, it allows lenders and banks to differentiate between applicants with a high risk of default and those who are creditworthy but lack an extensive credit history.
Financial companies must daily interact with a large number of consumers, making it challenging for them to keep track of all of them. AI minimizes the likelihood of errors while rapidly evaluating enormous amounts of data.
Source: Wipro
To mitigate certain hazards, AI employs monitoring capabilities that reduce the chance of fraud. Algorithms examine the past records of risk situations and find early indicators of potential future problems. Additionally, it facilitates the detection of fraud and the efficient administration of cash. AI is particularly good at avoiding credit card fraud, which has grown tremendously in recent years as e-commerce and internet transactions have multiplied. Banks also deploy artificial intelligence to detect and prevent money laundering, another infamous form of financial crime. Investigations of alleged money-laundering schemes become less expensive due to the detection of suspicious activity by machines hence helping in cutting the costs.
The use of Artificial Intelligence in the examination of new approaches to deliver extra benefits and comfort to individual users can prove fruitful. In the financial sector, Artificial Intelligence provides consumers with intelligent chatbots that enable self-service options. Not only does it minimise the strain on banks and the financial industry, but it also provides customers with more accurate information. Research indicates that successful banking-related chatbot engagements will increase by 3.1505% from 2019 to 2023.
Future of Artificial Intelligence in Banking Industry
The integration of IT, telecom, and retail has increased the likelihood of confidential information being transmitted through virtual networks. It occasionally leads to cyberattacks and fraud in the banking sector. This type of fraud not only harms the bank financially but also undermines public confidence.
The fundamental objective of Artificial Intelligence in the banking business is to assist clients by giving priority to their choices. Additionally, Artificial Intelligence plays a crucial part in ensuring client satisfaction with the bank’s services. Additionally, AI or machine intelligence aids the bank in understanding consumer expectations.
Benefits of AI in the Banking Sector
- Customer Satisfaction:
- Chatbots:
- Fraud Detection:
Scope of Artificial Intelligence in the Banking Industry
- Personalized Finance Guidance:
- Digital Wallets:
- Interactive Voice Response System (IVRS):
Advantages of Artificial Intelligence
- 24/7 Availability & Higher Productivity
- Day to Day Application
- Digital Assistance
- Management of Repetitive Jobs
- Error Reduction
- Cost Reduction
- Create efficiencies in the Q&A exchange
- Detection of fraudulent transactions faster than human analysts
- Fast real-time transactions are approved
AI is without question the future of the banking industry. According to industry experts, the AI market will reach $190 billion by 2025. As a result of the rapidity with which it is simplifying financial operations for clients, it will very soon replace humans and give solutions that are faster and more efficient. Massive investments are being made by companies who view this as a long-term investment in cost reduction. It helps companies save money on labour costs and eliminates human mistakes in this process. People and businesses will be able to make quicker, more intelligent judgments. The issue, though, is to strike a balance between humans and computers, as the desire to increase AI in the financial services industry will ultimately depend on how much firms invest in upskilling their personnel. “According to the statistics, the industry is in the middle of the upskilling process, with 49% of respondents indicating that training initiatives for staff to better comprehend AI are now in place.” As AI’s influence inside fintech continues to expand, experts predict that its use will spread to more and more industries.
