AI Adoption in Banking – Top Trends that Rule the Banking Industry

by | Last updated Jan 4, 2024 | Published on Nov 16, 2022 | Business Process Outsourcing, Document Conversion / Scanning Services

Regarded as one of the most trending technologies, Artificial Intelligence (AI) has now become a significant part of the banking industry. Banking institutions are at the forefront of deploying AI technology to unlock new possibilities and expand automation into all sorts of new banking areas. Reports suggest that 85 percent of financial services organizations are currently using AI and 77 percent of senior executives anticipate AI to have high or very high business importance in the next two years. Incorporating AI technology in the banking sector minimizes operational costs, improves customer support and process automation. AI solutions and applications help automate the arduous task of data discovery like – managing and reviewing documents or identifying critical clauses. Relying on document scanning services from a reputable provider can offer valuable support in this regard. Besides, AI makes banks efficient, trustworthy, helpful and more understanding. It also strengthens the competitive edge of modern banks in this digital era by allowing banks to update processes automatically and work under existing regulatory compliance.

Adoption in the Last Few Years

To be relevant and agile in a highly competitive market, banks must leverage technology, but most importantly, they must provide excellent service to clients. This will necessitate a thorough change of the bank’s business and technological levels. For instance, payments used to be primarily made in cash. Today, though, they are more device-driven. Earlier, banks have been quite slow to adopt AI technology into their day-to-day operations. Today, AI is primarily used for risk management and fraud detection. In fact, most banks are still in the process of expanding AI across their entire organization from limited use cases.

Banking on Artificial Intelligence – Top Applications

Artificial Intelligence (AI) accelerates digitization in end-to-end banking and finance processes. By implementing the power of data analytics, intelligent ML algorithms, and secure in-app integrations, AI applications help optimize service quality and identify and combat fraudulent transactions. It is estimated that between 40-50 percent of financial and banking service providers are using AI in their processes to harness the power of next-generation AI capabilities. AI has the ability to perform a wide range of banking operations in faster, easier, and more secure ways.

AI in banking is boosting the performance and competitiveness of banks and financial companies. The use cases of AI in the banking industry are numerous. Implementing AI in banking helps detect fraud, improve customer experience, track customer behavior for recommending more personalized services, analyze customer credit histories to predict risks associated with allotting loans, and many more. Below discussed are some of the top use cases of AI in the banking industry –

  • AI Chatbots – AI-based chatbot service for the financial industry is one of the significant use cases of AI in the banking sector. AI chatbots in banking are modernizing the way businesses provide services to their customers. Offering a more personalized experience to users, these intelligent bots can assist customers 24*7 and give accurate responses to their queries. Hence, AI chatbots for banking and finance operations enable banks to attract customer attention, optimize service quality, and expand the brand mark in the market.
  • Enhances Customer Experience – Banks are planning to tight integrations between back-end and customer-facing operations. Additionally, they are rapidly digitizing all services, from retail offerings, payment platforms, to wealth and investment management journeys. AI mobile banking apps (for Android/iOS) aim to improve customer experience and service quality. Implementation of AI and Machine learning in financial transactions helps banks to track user behavior and deliver highly personalized services to customers. Intelligent mobile apps using ML algorithms can monitor user behavior and derive valuable insights based on user search patterns. These insights would help service providers in providing personalized recommendations to end-users.
  • Accelerate Automation – Automation is one of the top AI use cases in the finance and banking sector. AI software helps banks in streamlining and automating every task which is done by humans. Therefore, AI applications can reduce the workload of bankers and optimize the quality of work. Through customized AI banking apps and AI Chatbot services, users can request service at any time and get accurate responses from AI virtual banking assistants all the time.
  • Data Collection and Analysis – AI in banking can help efficiently perform data collection and analysis processes. AI machines process massive data sets and extract valuable insights. This analysis will help banks to predict the future of their business and market trends with ease. In addition, customer data analysis through AI-powered mobile banking apps will also play a vital role in delivering personalized services and enhancing the overall user experience.
  • Risk Mitigation – Using AI and RPA, banks are creating solutions that reduce or eliminate human error in many processes. That, in turn, helps reduce security issues that can result from those errors. For instance, AI and machine learning can be used for checking financial status, document verification, and releasing loans. These are risk-related activities for bankers. AI-based mobile banking applications easily analyze the financial activities and the banking data of the borrower. This helps bankers to identify the risks in giving loans to them. In addition, bankers can analyze the borrower’s behavior thereby reducing the possibility of fraudulent acts.
  • Portfolio Management – Wealth and portfolio management can be done more powerfully with AI. This innovative AI technology can manage banking services and strengthen mobile banking operations. While remitting money through digital banking apps, AI will track and send immediate transaction alerts to the users, if they trigger any suspicious transactions. AI machines immediately alert the user. AI can automate the credit and debit card management system and ease the card authentication process thereby making the transactions safe and secure.
  • Analyzing Market Sentiments – AI in banking is used to analyze the mood of countless financial markets. By using machine learning techniques, AI models can predict the market conditions and provide insights into the market trends. Due to this reason, artificial intelligence models are increasingly used in hedge fund management functions.
  • High Security across Banking Functionalities – Usage of AI in banking and finance ensures high-level security across banking functionalities. Top mobile app development companies are integrating AI and developing the most advanced banking apps that monitor every transaction and protect the entire process like a firewall.
  • Compliance in Banking – The banking sector needs to update financial transactions and processes on a continuous basis under the existing compliance rules and regulations. In most cases, banks maintain an internal compliance team for this purpose. The compliance teams clean web pages and other internal documents to stay updated with the new rules. However, this process can consume a considerable amount of time and require more capital to perform it manually. AI-based software products can actively find the rules that apply to the banks and make them compliant with those rules. AI software boosts the skills of compliance officers and allows them to scale their operations. Generally, a bank should not disclose its customer financial data as it is highly prone to hacking. AI-based fraud analytics tools detect suspicious acts of hackers. In this way, AI helps banks to offer high-level protection of customer data. Further, AI systems also make processes compliant with the changing regulatory compliance.

Artificial Intelligence (AI) can revolutionize banking by increasing productivity and enhancing customer experience and business economics. Despite the banking industry’s long-standing hesitancy to implement Artificial Intelligence technology, the opportunities that AI offers in the banking sector are vast. Implementation of AI technology in banks can help automate routine banking tasks and deliver significant efficiency and cost-saving benefits. Banking institutions can consider associating with a reliable business process outsourcing company to carry out various financial processes more quickly and efficiently.

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