Three Applications of Artificial Intelligence in Banking
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While businesses from every industry vertical have potential to reap the benefits of the ongoing AI Revolution, perhaps no other industry has the scale and the relevance for potential AI applications that belong to banking and finance. The necessity of financial health in today’s monetary economy means every adult professional worldwide relies on banking in some form or the other, representing a huge possible market. In recent years, there has been a growing appetite for applying the latest advances in technology to banking and the financial industry as a whole, giving rise to the era of ‘FinTech’. Banking is an industry that impacts virtually all consumers and businesses worldwide, meaning AI innovations applied to this sector have the potential to reach all corners of the globe.
Artificial Intelligence has tremendous potential to transform the banking and financial services sector
The following are three ongoing ways Artificial Intelligence is being applied to this industry:
Security and Fraud Prevention
Security and fraud prevention are critical areas of interest for banks to maintain their reputation and financial integrity
It is no secret that security is one of the most important facets of the overall service any bank or financial institution must consider. With the increasing shift towards biometric security solutions in the banking sector, such as Fingerprint Scanners and even Facial Recognition in the future, a robust and reliable AI Security system is necessary to maintain personal banking security. In addition, because of their increasing strength in pattern detection from high-volume data, an AI banking system also has the ability to detect unusual activity in customer accounts and flag up the possibility of a fraudulent transaction. This also means the “false positives”, or those transactions that are flagged as fraud but are really not so, are less frequent, meaning less of a nuisance for the end user. This is hence an important application area of Artificial Intelligence to banking and finance.
Chatbots for Customer Service
Chatbots can offer a seamless, integrated banking experience to customers in a convenient and user-friendly interface
One of the most important signs of the increasing success of chatbots in financial institutions is that customers are finding it increasingly difficult to distinguish between human personal assistants and automated financial bots for customer queries. The recent advances in Natural Language Processing and Deep Learning have allowed for chatbots that can potentially handle a wide range of responsibilities. Chatbots can be used for bank account login, checking up on fund status, performing actions / bank account transactions and even for educational/information purposes. They can be integrated with email/SMS, meaning the bots can contact dedicated customer service representatives or even be configured to send periodic alerts and messages to customers on account activity. All of this makes for a one-portal seamless banking experience that is both convenient and customer-friendly, and that represents the value that chatbots bring to banking and financial institutions.
Predictive Analytics for Personalization
Because of the wealth of demographic and transactional data available to them, banks are good candidates to apply advanced predictive analytics for increased personalization
Banks, because of the scale of their typical customer base, are usually very data-heavy; a characteristic that lends itself well to Artificial Intelligence applications. Banks have a wealth of customer data that includes demographic, transactional and even website analytics. All of this data can be used to build high-quality machine learning models that can unlock patterns and insights that help banks understand their customer base better. This could lead to schemes or services that are more personalized to the bank’s end user, possibly resulting in improved engagement and conversion of interest into billable customers. Predictive analytics is, hence, another possible application of AI that can make banks smarter and use the data they have in a more intelligent fashion.
AI is a crucial element of the ongoing ‘FinTech’ Revolution
The AI ‘FinTech’ revolution is only just beginning, but it has already had a huge impact on the way business is being done in the banking and finance sector. Digital businesses looking to service banking clientele need to have a good high-level understanding of what banks hope to achieve, so that they can use this to design AI products and services that will improve all facets of banking.