Rise of Artificial Intelligence in Banking

Artificial Intelligence
Rajnish Khare
Head – Digital Transformation, Social Business &
New Media and Mobility Banking

The world of Banking and Finance is changing more than ever, with Artificial Intelligence (AI)  being the front-runner in bringing about a sea-change in the banking industry.

Various AI solutions have already been implemented in banking across various areas like core banking, operations efficiency, customer facing services and analytics. With the onset of AI, banking will no longer be just apps, websites or physical branches but a whole new experience.


Although, it is only recently that we have witnessed the application of AI, the history of AI goes back to the 1950s where a paper was published by Alan Turing about the possibility of machines with true intelligence.

This was only the inception of Artificial Intelligence as a concept but no use case or AI process was implemented until the late 1990s. The pace of AI only picked up after 2011, wherein prominent tech companies like IBM, Microsoft, Google and Facebook started investing in Artificial Intelligence and Machine Learning for commercial applications.

Microsoft and Apple marked their debut in 2011 with Cortana and Siri (Virtual Personal Assistant) respectively. The trend was then picked up with DeepMind team, that used deep learning algorithms to create a program that won Atari games. Facebook also backed AI with the launch of Moments, that detects faces in photos shared with friends.


Today, the applications of AI are ubiquitous ranging from data analytics to a number of tools like software testing, face detection, optical character recognition. AI is already being implemented across a number of service sectors including advertising and targeting, banking, finance, media, navigation, aerospace, agriculture and genetics.

In 1990, big techs concentrated on research in the AI industry enhancing its scope to natural language processing, image recognition, deep learning, speech recognition and emotions. This was later picked up a number of start-ups with a view to create business value. New category leaders will appear by 2020, which will be marked as the inflection point for Artificial Intelligence. This will be followed by rise in new leaders and the consolidation of laggards.

AI in Financial Services

Currently, the application of AI in the financial service sector is at a nascent stage. We are still to witness a number of changes in the way communications, customer service, recruitment and wealth management takes place across the industry. For example, today stock trading and investing happens mainly on personal skills and divine luck. But in future we will be able to manage wealth with the help of sentiment analysis, crowd sourced research and algorithms.

Emerging Technologies and Artificial Intelligence at HDFC Bank

To stay ahead of the technology curve in the industry, HDFC Bank has made sure to leverage emerging technologies across its range of services. We are all pervasive even when it comes to the range of data connectivity. Solutions like our MobileBanking App, AI based OnChat has been developed for customers who enjoy good connectivity. Customers who struggle with limited connectivity issues have LITE App and m – site to avail banking services, whereas customers with no connectivity or feature phones have missed call commerce, SMS/ Toll Free Banking at their service.

HDFC Bank’s approach to AI is holistic. We have a strong testing and learning-driven approach. Customer Experience, Customer Support, Process Automation, HR, Security, Fraud Detection are some of the areas where we will be developing our AI solutions. We don’t want to just create gizmos. Our guiding principle is “Generating Customer Value” out of artificial intelligence. To put it across as is, AI will help us manage both internal and external customers much more effectively and help reduce our operational costs exponentially in the near future.

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 & customer service assistant and HDFC Bank “IRA” – Our Intelligent Robotic Assistant at branches. The realm of innovations pertaining to artificial intelligence extends to recruitment, customer service, core banking, employee training and engagement, operational efficiency, analytics and e – commerce.

Also, many additional initiatives are in the development phase under these domains.

HDFC Bank OnChat is a chatbot based on Artificial Intelligence and Natural Language Processing, wherein user can interact, confirm and pay for services within chat itself without any additional app download.

Currently, three services are enabled on the platform and an addition of 12 services will be added. HDFC Bank’s ‘Ask Eva’ is another initiative for enhanced customer engagement using automated and personalised response.

It is an intuitive and interactive way to engage people’s search questions with instant answers in a conversational manner. Ask Eva has cognitive learning capabilities that is able to understand and act upon the user queries. Our third AI initiative is ‘IRA –Intelligent Robotic Assistant’ available in branches. The assistant is able to meet, greet and guide customers as per their requirement.  We have also tapped upon AI for Ad bidding which helped us in increasing the conversion rate by five times. This initiative helped in reducing the overall cost of acquisition for digital products and in improving overall profitability.

IoT and AI – The interdependence

This being said, to ensure success, one of the major factors of AI will be its interoperability with Internet of Things. The number of connected devices grew by approximately 44 % from 2003 to 2016. The rise of IoT was faster than anticipated and it is important to keep pace with it, as it is this conversation between man and machine where the intelligence emerges. The challenge here is dealing with incompatible APIs and disparate systems of devices, cars and applications fails the interoperability of IoT.

Future View

The AI revolution is not only restricted to the banking sector. There are a number of other industries that have already witnessed the impact of AI. Some of the highlights of the industries include automatic delivery of anaesthesia for standard procedures, thus helping in cost reduction, enhanced customer service, robo-advisers that provides recommendations to financial clients based on financial data or the advent of self-driving cars. All these will help the industries in replacing mundane and repetitive jobs like form filling and back-end verification.

In conclusion, we at are at cusp of an artificial intelligence revolution. Improvement and development in the AI industry, will increase productivity at a reduced cost. Managers across industries will have to raise their ante on skill-set upgradation.

Whereas we, at HDFC bank, aim to make AI a part of our digital DNA.

(The writer is Rajnish Khare | Head – Digital Transformation, Social Business & New Media and Mobility Banking | HDFC Bank.The write up is his personal analysis.)

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