In today’s fast-paced world, digitization is becoming common. It’s faster, easier, and more flexible. With greater access to information through Spectrum internet deals, technology and innovation are becoming easier. As a result, Artificial Intelligence (AI) is growing both in popularity and utility. Currently, it’s being used in industries related to entertainment, education, business, and even banking and finance.
While AI is not as pervasive in the banking sector yet, it’s predicted to transform and revolutionize this industry. Here’s how.
Enhanced Fraud Detection
One of the most important factors for banks to consider is security. With cybersecurity and malware threats at an all-time high, this is especially necessary today. Banks have access to sensitive and private information along with a significant amount of money. In addition to this, they also have hundreds of customers and clients who are dependent on these institutions for the safety and security of their possessions.
When Artificial Intelligence is used for fraud detection, the chances of cybercrime are dramatically reduced. Humans are prone to error. It’s common for them to make mistakes and fall short. However, with AI, fraud detection becomes more advanced. This leads to greater security and data protection.
Greater Customer Service
The banking industry requires solid and efficient customer service. This is because client support is a significant part of banking and finance. In fact, this is what draws customers to banks. Clients require frequent assistance, advice, and information on plans, packages, and deals. Apart from this, banking is mostly digitized now.
This means that technical errors are likely to occur frequently. I this context, it’s important for banks to have agents available to dispense any crucial information. With virtual assistants like Siri and Alexa, customer service has been made easier. This has also led to 24/7 customer support. In addition to this, such assistants are always available and are programmed to answer important questions. People are likely to grow tired. Especially with redundant tasks such as these. Thus, AI in customer service is being used by several banks.
Reduced Operational Costs
While the banking industry is involved in operations that are largely digital, it still has to bear a wide variety of operational and functional costs. This is because this sector requires human assistance in the form of bank tellers, managers, and customer support teams. Furthermore, despite digitization, banks still require a significant amount of paperwork. It’s harder to get machines to sift through these and find relevance within paper.
However, when you increase the role of Artificial Intelligence in banking, operational costs are reduced. This is because they replace much of the time and effort-intensive work with quick and efficient tasks. AI is also less prone to error so you don’t have to worry about irregularities or mistakes.
Advanced Credit Decisioning
Banks receive a large number of credit and loan requests. Despite these being significant in number, most banks use humans to determine decisions related to loans and credit. This involves bank history, customer references, credit transactions, etc. This method has been used for several years. However, it’s not the most efficient in determining decisions based on credit and loans. In fact, several studies have revealed that such methods don’t always lead to accurate results. In fact, they lead to increased time and effort.
In contrast, AI increases the chances of decisions that are more informed and safe. Along with this, they’re also likely to produce positive outcomes. Loan decision systems based on artificial intelligence spend time analyzing and studying human behavior and patterns to make the final decision.
Automated Investment Processes
In today’s world, investment is given great significance. A large number of people depend on investment bankers and similar professionals to guide them through their decisions. This used to be a lengthy and tedious process before. However, the use of AI has made it easier and more convenient. In addition to this, it also increases the chances of well-informed decisions and outcomes. With advanced technology and innovation, AI has the ability to dive into research to produce accurate decisions. In fact, several investment banks are using artificial intelligence systems to scan the market for untapped investment potential. After this, investment algorithms are used to determine the feasibility of such opportunities.
Moreover, a large number of companies are making use of a tool known as the robo-adviser. This helps users with managing portfolios. As a result, customers can gain reliable guidance on decisions related to investment.
The Downside
While artificial intelligence is important for the future of the banking industry, it also has its fair share of disadvantages. One of the most significant of these is AI bias. This is used to refer to the development of decision-making AI models. Humans are likely to affect the training of the machine learning model by bringing their assumptions and biases. This alters the model and leads to inefficient training.