Artificial Intelligence — A Cutting-Edge Technology Revolutionising Banking Sector

Artificial Intelligence

Artificial IntelligenceAfter being a subject of much curiosity and assumptions for several years, Artificial Intelligence (AI) has finally come out of its shell and experiencing a much-focused implementation across the sectors. Exploring the mounting vistas and challenges associated with AI in the banking and financial sector Rashi Aditi Ghosh of Elets News Network (ENN) delves into this highly progressive topic of the recent times.

AI and its Impact on Indian Economy Implementation of AI will change the nature of work and create better outcomes for businesses and society. Not only this, the technology will most likely add $957 billion to the Indian economy, according to “Rewire for Growth” a report by Accenture, a management consultant company. The report further revealed that AI has the capacity to amplify India’s annual growth rate of gross value added (GVA) by 1.3 percentage points inflating 15 per cent of the country’s income in 2035.

Significance of AI in the Indian Banking and Financial Industry

According to a PricewaterhouseCoopers (PwC) FinTech Trends Report (India) 2017, in the last year (2016), global investment pertaining to AI applications increased to $5.1 billion from $4.0 billion in 2015. Technologies like AI and Cloud Computing are also termed as the most preferred services used in the Banking, Financial Services and Insurance (BFSI) sector in India during 2017, said Microsoft. “Artificial Intelligence may have had few false starts but today its role in terms of financial services is pivotal. This revolutionary technology has waked up again and we all are now aware that it can bring progressive changes if used very efficiently,” said Madhusudan Shekar, Principal Technical Evangelist, Amazon Internet Services Private Limited.

Several reports suggest that no other business sector as much as the financial industry is more focused on developing and implementing AI in a bid to attain speed, accuracy, and efficiency. This technology has shown a great potential towards transforming both — front and back office operations with its cutting edge self-improving programmes. AI Applications by Banks in India Several banks namely the State Bank of India (SBI), HDFC bank, Axis bank and ICICI bank have made progressive steps towards implementation of AI. India’s largest public sector lender SBI is currently using an AI-based solution.

This solution is developed by Chapdex. In addition to this, the bank has also launched a chatbot named SIA-an AI-powered chat assistant that offers instant replies to customer queries. This chatbot is developed by Payjo,a Bengaluru based startup.

“We are investing in blockchain, big data analytics, AI, cognitive technologies, robotics, etc to improve the services for our customers. All this is becoming possible because of the support of top leadership team. Keeping Artificial Intelligence (AI) and big data tools in mind, we have introduced chatbots for the tellers in the branches. AI allows us to understand customer portfolio 360 degree as soon as he walks in. We launched dig voucher where no paper is required for withdrawal or deposit. This voucher can be submitted even before entering a branch,” said Shiv Kumar Bhasin, Chief Technology Officer, SBI.

Private lender HDFC bank has also launched its AI-based chatbot named – Eva (Electronic Virtual Assistant).

EVA has been designed by Bengaluru-based Senseforth AI Research. “HDFC Bank’s approach to AI is holistic. We have a strong testing and learning driven approach,” said Rajnish Khare, Head, Digital Transformation, Social Business and New Media and Mobility Banking, HDFC Bank. “Our key developments in the Artificial Intelligence space includes HDFC Bank OnChat – An AI based e-commerce chatbot on facebook, Programmatic Ad Bidding, AI based ad bidding tool for digital marketing, HDFC Bank Ask “Eva”, AI based FAQ and customer service assistant and HDFC Bank “IRA”, Our Intelligent Robotic Assistant at branches,” he added. India’s second largest private sector lender ICICI bank has installed more than software robotics in more than 200 business processes across the country. Last year, it also launched its AI-based chatbot, named iPal. Axis Bank has unveiled an innovation lab called “Thought Factory” last year in a bid to boost the AI technology solutions for the banking sector.

AI and its Challenges

 Implementation of AI in the banking and financial sector has many benefits but one must not ignore the challenges associated with its usage. According to the global Financial Stability Board (FSB), the risks created due to the use of AI and Machine Learning needs monitoring. FSB is an entity that coordinates financial regulation across the Group of 20 Economies (G20). The regulator in its first report (released in November 2017) said that there are no internal regulatory standards for AI and machine learning and its rising usage in the BFSI Sector has left the regulators unsure about the real-time impact of new and unique links between markets and banks.

 “We must view AI with a healthy amount of skepticism, and avoid putting blind trust in every claim we hear. Proper model development and governance is a must, and we should watch out for companies purporting to re-invent AI. It’s not the technology solution for every problem, and it can be easy for companies to misuse the algorithms that drive artificial intelligence due to inexperience, or the race to be on the hype cycle,” said Vishal Goyal, Country Manager, South Asia, FICO, a leading analytics software company.

“We should also be wary of irresponsible use of AI. It won’t be the algorithm that harms you or your business, it will be inexperienced that try to apply artificial intelligence,” he said. AI is evidently one among the most promising technologies meant for transforming the banking and financial services. Implementation of this technology will definitely help in business acceleration, reducing the overhead cost and controlling fraud and errors. However, in a country like India where Financial Inclusion is still one of the most ambitious projects, its usage will be bit sluggish in comparison to the other parts of the world. While several reports are suggesting that it is emerging as one of the most preferred technology options for the BFSI sector and it is about to pump the Indian economy to a larger extent, it is also posing a threat to the employment scenario prevailing in the country. Last year, former Citibank Chief Executive Officer (CEO), Vikram Pandit said that 30 per cent of banking jobs will disappear in the next five years, “Artificial intelligence and robotics reduce the need for staff in roles such as back office functions.” Citigroup has predicted that nearly a third of the jobs in the banking industry could be lost in the decade between 2015 and 2025. “The future of branches in banking is about focusing on advisory and consultation rather than transactions,” said Jonathan Larsen, Global Head of Retail and Mortgages at Citi.


Artificial Intelligence may have had a slow start in the banking and financial sector but according to various research reports and expert opinions, this piece of technology is now widely accepted as one of the most preferred option and its future seems to be bright

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