Deep learning and machine learning technologies are used in the process

Added to many challenges banks face is the network crashing. Banks generally function to soothe the customers need at right time. That is the reason behind the launch of credit and debit cards. But network jams and error signs at the critical time have been a threat to cardholders.

Banks are already using Artificial Intelligence (AI) technologies in their daily banking and functioning system. The banking sector was not slow to adapt to new technologies when something useful was invented. Starting from coming up with chatbots that answers customer queries to moving to mobile banking and malpractice detection, the banking sector has done its best in embracing the customers of the digital era through technology.

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 the banks took around 22 months to recognize the fraud since its occurrence. This makes it nearly impossible to revive the lost money. Henceforth, AI technologies are there to detect malfunctions before it could cost a lot.

Banking works involve a lot of human hand and labour. However, AI has drastically minimised it. The technological changes have cut short the human work at the front and middle office. It is one of the greatest costs saving opportunity for banks. A research report suggests that banks could save an estimated amount of $447 billion by 2023 if they switch to the AI banking system. The report further unravels that the front and middle office accounts to $419 billion of the total savings. Enforcing AI in banking reduces the time consumed by bankers on digitizing, discovering and onboarding document template.

Since the banking process looks confined with the emerging AI technology, it is now time for innovation to profit the cardholders.

Visa Unveils advanced AI system for cardholders

Visa Inc. announced that the company is going to benefit its credit and debit card users by unveiling Artificial Intelligence (AI) systems that could approve and decline transactions on behalf of banks whose own networks are down.

The decision to approve or decline a customer's card request is up to the bank to choose. But it is often disrupted by challenges like natural disasters, buggy software or any other calamity which makes it impossible for bankers to get in touch with customers. Henceforth, the new system launched by Visa will make a backup system available to banks who sign up for service starting from October.

Visa is the largest financial services company in the US card network that has adopted the new service of the growing use of AI in banking. According to a report by market research firm International Data Corp, banks are expected to spend US$7.1 billion on AI in 2020 and it will grow to US$14.5 billion by 2024. The review was done based on initiatives such as fraud analysis and investigation.

Deep Learning is the brain of Visa's new launch

Deep learning is an AI function that imitates the working human brain in processing data and creating patterns for use in decision making. Deep learning is a subset of machine learning what has networks capable of learning unsupervised from data that is unstructured or unlabeled. The technology is of great use in the banking system. Some of the key benefits of using deep learning in banking are,

• Risk management- The technology identifies the risk score of a customer depending upon his/her salary, nationality, credit history, etc.

• Fraud Analytics- Deep learning uses its analytic to identify the pattern in data, getting a holistic view on customers which will distinguish between the fraudulent and normal activity.

• Customer segmentation- Deep learning helps banks mine intelligence from the underlying data and segment customers effectively.

Deep learning is a technology that is already benefitting the banking sector at a wide range. Henceforth, Visa is using the technology to gain card holders credit. Visa has an in-house data scientists and software engineers who worked as a strategist in developing the system. The company has one patent related to technology and has applied for two others.

The reason behind the system was to stop giving a supplement to network disruption and outages that affect millions of credit and debit card transactions annually. When a disruption happens, cardholders have to undergo the bitter process of calling their banks for assistance. Thousands of dollars are being lost at the waiting time both to merchants as well as banks.

How Visa's automatic transaction approval functions?

• When Visa's network detects that the bank is facing network disruption, smarter STIP kicks in automatically.

• The older version of STIP uses a rules-based machine learning modelas the backup method to manage transactions for banks in the event of a network disruption.

• The deep learning technology which is trained to sift through billions of data points of cardholder activity define correlation on its own.

• If the mechanism finalizes that the cardholder transactions are normal, it approves the request based on historical data about the person such as the location of the merchant in relation to the cardholder and the time of day they are shopping.

Banking sees a sign of relief since technology invaded the sector for better. Banks are slowly adapting to more AI advancements that emerge from time-to-time. If other banks follow the Visa's footstep, the whole banking sector and money transactions through cards without disruption will turn to be a major achievement.