Artificial Intelligence (AI) acts as the powerhouse of all the growing industries. At a time like this, the banking sector is trying its hand, leg and even head to give a head-start to the AI developments. The financial services industry is appealing to enter AI market to avail the luxury of accurate data and investment. The development assists banks with better customer service, fraud detection, reduction of managing cost and easy decision-making through AI analysis.
Customers have expectations that can't be turned down. Expectations to get work done faster and with zero error. The only by-standing solution is the utilisation of AI in the everyday banking sector. AI has the ability to keep the data private, give accurate answers and provide security for the customer's money.
Indian banks are taking baby steps to incorporate with the developing technology of using AI in its everyday banking system. One thing that the industry should remember is that the privacy and data security in the country is still at stake. A long-standing solution for this could be framing regulations on flourishing technologies and data security and privacy by the Reserve Bank of India (RBI).
Like all other industries, banking should also go with the flow to adopt new business modifications in order to thrive in the developing era. It will be of no interest to anyone if banks follow the old retro style banking today. However, the issues on the legacy system, lack of data handling and high expenses have prompted the banks to espouse the AI technology. The banking sector focuses on some key aspects to get a better outcome.
The text chat system identifies the context and emotions of the customer and replies in the most appropriate way. Some of the known AI Chatbots in India are the SBI Intelligent Assistance (SIA) by State Bank of India that helps customers with everyday banking tasks like a bank representative, HDFC bank's Electronic Virtual Assistant (EVA) where customers get to chat with the AI system and iPal by ICICI bank that answers questions through Amazon Alexa and Google Assistant. Chatbots improve the customer's experience and make banking easier.
AI is quick to diagnose the abnormal activities and transactions in the decade of rampaging cyberattacks. According to 2019 annual report released by RBI, loss due to banking fraud has surged 73.8% despite the government's efforts to curb them. The more shocking news is that banks took around 22 months to recognise the fraud since its occurrence. This makes it nearly impossible to revive the lost money.
When the technologies evolve, the digital frauds develop itself to the improvement and find new ways to thrive. Banks must deploy content-sensitive AI solution to advance the monitoring. The content-sensitive AI identifies transaction frauds, detect anti-money laundering patterns and make customer recommendations. Money laundering is identified when an illegal sum of money is portrayed as legal by money launderers. The AI analyses the suspicious patterns and identifies the hidden action.
A research report suggests that banks could save an estimated amount of US$447 billion by 2023 if they switch to the AI banking system. The report further unravels that the front and middle office accounts to US$419 billion of the total savings. Enforcing AI in banking reduces the time consumed by bankers on digitizing, discovering and onboarding document template. It also minimises the rate of error and reduces the document digitisation cost, which accounts to over hundreds of millions of dollars for a single department, according to IBM .
The extended way of mobile banking and tracking service aids the customers to no longer wait in queues and makes banking handy. It also gives the insight of users spending patterns and provides recommendations on investment and risk profiles. One such initiative is the 'Know Your Customer' service which keeps away the submission of physical documents and verification processes. The AI-based computer technology verifies the documents; use Optical/Intelligent Character Recognition (OCR/ICR) technologies to digitize scanned documents, and Natural Language Processing (NLP) to make sense of them in the KYC service.
AI has far better memory compared to humans that make the banking sector get its help when it comes to an accurate diagnosis. AI can predict the future with the inputs from past structured and unstructured data and make a diagnosis out of it. This can make a potential loan defaulter face loss mitigation strategies. It can also suggest the best time to approach the customer to sell products and furthermore.
The banking industry should come together as a consortium to share the AI system. By this, the co-operative and regional banks will get the chance to experience AI at a combined cost and security. The future of the developing AI in the banking sector is the evolving customer-based humanoid robots that could take its role to guide through the customers in the banking process. The world is fast evolving to the AI concept and the banking industry is looking forward to a positive and helpful growth through AI mechanism.
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