As the entire business world is heading toward a revolutionary transformation from an era of “Digitisation” to an era of “Cognification”, we must confess that our banks and financial institutions worldwide are the ones that have recognised the potentials of Artificial Intelligence at a very early stage and adopted it in their transformation journey.
Using Artificial Intelligence to redefine their products, processes and the strategies is the main consideration for most of the forefront banks and financial institutions today. This includes predictive and cognitive capabilities enabled through cutting-edge technologies like Machine Learning, Deep Learning and Natural Language Processing.
One of the main reasons behind the same is essentially banks are in a data intensive business, So they can’t avoid artificial intelligence which is again a technology that can provide intelligent predictions and recommendations by processing multiple data sources of huge volume in a very efficient way.
Secondly, banks have access to financial details of their customers and know them far more intimately than probably any other business. With AI they can make highly relevant recommendations about financial products and services to their customers by leveraging such details.
Also, as AI applications have the capabilities of automating many repetitive manual tasks, there is always an angle of optimisation of time and effort and hence the cost. But the most important angle is the efficiency and robustness that it brings on the table which is remarkable and not possible to achieve manually.
There are many areas of Financial Industry where Artificial Intelligence and Machine Learning have already created its footprint but there are still many areas that are untouched and are going to be the core focus in the coming years.
The financial services industry can be broadly classified into three major segments where AI has become the needof- the-day today. They are Capital Market, Consumer Banking and Insurance and that almost covers the majority of the sector.
Robo Advisors, High Frequency Trading, Risk Management, Anti-Money Laundering, Cyber Security, Fraud Detection, Intelligent Predictions and Recommendations are few areas where AI applications has always been linked to. But in reality there are many more areas in financial industry where AI has been already playing a crucial role that many of us probably not much aware of those, like many embedded AI algorithms within enterprise applications to bring the intelligence and smartness in those enterprise applications.
Artificial Intelligence has the ability to process enormous amount of data very quickly, which is far more data than ever processed in the past by human or any conventional computer programme. And that’s going to improve the financial institutions to provide better services that they provide to their customers. In wealth management, they will be able to provide much better, more targetted and efficient advices to their customers.
Risk and Credit Assessment is an area where Machine Learning and Deep Learning are playing the role of a game changer and insurance industry have adopted it largely. They are finding it very compelling primarily because AI is to simply changing their business entirely.
Smart wallet is another area of interest for the banks all over the world, the banks has started providing smart wallets to its customers. These AI enabled smart wallets will look at customer’s spending habits and it will learn from his/her behaviour to provide smart advises and recommendations of future spending. It will encourage savings and responsible spending in the form of predictive alerts and recommendations. Similarly, AI can detect if a customer is likely to switch their products or services, this early signal will help banks to offer him/her more suitable product which may help retaining the customer.
Artificial Intelligence has the ability to process enormous amount of data very quickly which is far more data than ever processed in the past by human or any conventional computer programs.
Now coming to the Risk Assessment, Credit assessment and Regulatory areas, today if you want to apply for a loan, in a conventional way then a home loan or a personal loan takes couple of weeks or may be even more to clear all kinds of credit checks before approving such loans. With Artificial Intelligence the processing lead time will come down to an hour or maximum two. This is because AI’s capability to do credit assessment in much faster and better way by interrogating various customer data sources.
We are already experiencing the change in the interface the banks are having with their customers. They are increasingly changing those to Chat Bots, Robots and Humanoids as their first line of interfaces with their customers to enhance service experiences. We are seeing the similar trends in the banks in India too.
Also there are lots of AI applications coming up into areas like Anti-Money Laundering and Regulations because it’s very easy for an AI system to analyses lot of data at its finger tips and determine the patterns and better identify frauds, money laundering and criminal activities quickly and highlight those to the bank authorities well in advance so that immediate actions can be taken to arrest those activities.
Other areas of AI booming in the financial sector are using facial stress analysis to automatically detect ATM frauds. AI financial advisers called Robo-Advisers of different variances work proactively for its customers providing intelligence 24×7.
Views expressed above are a personal opinion of the author. He is an industry expert on Artificial Intelligence in banking.