Artificial & Augmented Intelligence Is Re-Making Banking

Artificial intelligence (AI) is a critical aspect of the Fourth Industrial Revolution. Financial institutions around the world are now making large-scale investments in AI, while governments and regulators seek to grapple with the significant uncertainties and growing public trepidation as AI becomes central to the fabric of institutions and markets. 

The banking sector is witnessing groundbreaking changes: foremost being the rise in customer-centricity.

In 2018 the World Economic Forum reported that 76% of senior banking leaders said AI is becoming critical to organisations distinguish markets. The Ex-Head of Deutsche Bank predicted robots could replace 50% of banking staff. Capabilities instilled by Artificial intelligence (AI) have the potential to radically change the way banks operate, a fact that increasingly puts AI on the executive agenda. Banks are increasingly looking beyond their core to identify how AI can transform their business models, thereby unleashing additional value.

Artificial Intelligence (AI) is becoming ubiquitous in recent years and its uses are seen in every industry from health, to travel, to banking, to hospitality and finance. According to the IHS Markit’s “Artificial Intelligence in Banking” report, the global AI market is expected to reach $300 billion by 2030. 

AI is becoming important for all businesses that rely heavily on data. This is because this technology has the ability to teach itself and make it better through its practice. 

This is done through deep learning which includes the acquisition of new knowledge, the development of motor and cognitive skills through experience or practice, the assembling of knowledge into general, effective presentations and the discovery of new facts and theories through observation and experimentation.

Deep learning is a crucial fixture in the banking industry giving way to infinite possibilities and transforming traditional banking.  

AI Transforms the Banking Industry
AI-based technologies aim at making computers copy intelligent human behaviours performing specific tasks that only humans used to be able to do. They can “read” text, “see” images, “hear” natural speech as well as organise and interpret information to make predictions based on this information. Therefore, here are five ways that AI is transforming the banking industry. 

Fraud Detection
The banking industry is extremely vulnerable to hacks and scams and fraud detection and mitigation is the topmost priority of the banks. AI plays its role in decreasing rates of false positives, preventing fraudulent attempts and reducing payment frauds.
AI is extremely efficient in detecting fraud with 63% of financial institutions saying that AI is capable of preventing fraud before it happens. Through supervised machine learning, AI is able to interpret trend-based insights which joined by completely new knowledge gained through unsupervised machine learning, makes it possible for AI to determine whether a transaction is fraudulent or not. 

Enhanced Regulatory Compliance
As the cases of frauds and scams increase, banks come under increased pressure from regulatory bodies to have strict regulations. In order to be properly compliant with these regulations, AI can be utilised. 
Relying on cognitive fraud analytics, AI observes customer behaviors, track transactions, recognise dubious activities and keep up with suspicious accounts. 

Reduction in Costs
Cost reduction is a huge advantage of integrating AI in the banking industry. It is expected that by 2023, $447 billion will be saved in costs due to the use of AI in banks. Human error is one of the leading causes of financial data breaches and unfortunately, errors are costly yet unavoidable. Since AI is a lot better at handling unstructured data, error rates are reduced and subsequently the cost to resolve that error is saved. AI tools that are 80% automated, 90% of accuracy results in reductions of about 30 to 40 percent of the original cost spent on the onboarding process. 

Enhanced Customer Experience
Customer experience directly affects the way a business is perceived and especially in the case of banks, people use such banks that provide swift and easy transactions with 24/7 access to their money. 
Banks are now introducing chatbots and voice assistants to provide a more personalised experience to their customers.
Since chatbots don’t follow any time-zone, it becomes very easy for users to access them anytime, anywhere in the world. 

Mobile Banking
In this digital age, people prefer to perform their financial transactions on their smartphones. Through mobile banking, the entire concept of traditional banking has been revolutionised. Mobile banking allows users to perform financial transactions anywhere in the world at any time from the comfort of their homes. 32% of financial institutions are now using AI tools like predictive analytics, voice recognition, and recommendation engines to provide a more personalised touch to the customers. 

AI-driven Future
AI will not only empower banks by automating its knowledge workforce, it will also make the whole process of automation intelligent enough to do away with cyber risks and competition from FinTech players. AI will enable banks to leverage human and machine capabilities optimally to drive operational and cost efficiencies, and deliver personalised services. All of these benefits are no longer a futuristic vision to accomplish for banks. 

Deloitte:               FinTechFutures:        WIPRO:          Infosecurity-Magazine

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