Artificial Intelligence (AI) is transforming the way the global banking industry functions. AI is already making banking smarter, faster, and more efficient with applications in fraud detection, customer experience and regulatory compliance.
However, the future is even more promising. We have only scratched the surface of what AI can offer, and the global ‘AI in banking’ market is projected to grow from $19.7 billion (equivalent to Rs. 1.7 lakh crore) in 2023 to $137.2 billion (equivalent to Rs. 11.9 lakh crore) in 2030.
So, how exactly will AI transform banking over the next five to ten years? Let’s explore eight predictions that will shape the future of AI in banking.
1. AI will provide a truly personalised banking experience
Gone are the days of banks offering one-size-fits-all solutions to customers. AI has already pushed personalisation in the banking sector to a whole new level, and will only take this several steps ahead in the future.
● Banks will tailor financial products to personal spending patterns, income cycles, and life aspirations.
● AI-driven money managers will give real-time advice on saving, spending, and investing.
● AI will change interest rates dynamically according to customers’ habits, giving monetary incentives to financially prudent users.
2. Conversational AI will replace traditional customer service
Nobody likes waiting in long queues or struggling with slow customer support.
AI-powered chatbots and virtual assistants are set to change that forever.
● Chatbots will answer most banking questions, ranging from basic balance inquiries to sophisticated mortgage guidance.
● Voice banking will go mainstream, enabling customers to converse with AI assistants as they would with a bank manager.
● Sophisticated AI will even recognise emotions, providing a more human customer experience.
3. AI will be the central mechanism of stopping fraud
Cybercrime is evolving, but AI is evolving faster. In the future, AI won’t just detect fraud when it happens, but will stop it before it happens. Here’s how:
● AI will monitor real-time transaction behaviour, flagging anomalies within milliseconds.
● Biometric authentication (face, voice patterns, and even typing patterns) will do away with passwords.
● Banks will employ AI to anticipate fraud patterns before they occur, one step ahead of cybercriminals.
In the next few years, we may eradicate banking fraud completely.
4. AI will disrupt traditional scoring models
Your CIBIL rating may not be the sole criterion determining your eligibility for a loan anymore. AI will transform the process of lending decisions with alternative credit scoring.
● AI will use utility bill payments, rental payments, and e-commerce transaction records to gauge creditworthiness.
● SME owners and gig economy workers, who are most often rejected for loans because of their absence of formal credit history, will have easier access to loans.
● AI will forecast payment risks in real time, and banks can use this to give dynamic, customised loan terms.
5. AI will automate compliance in banking
There are increasingly heavy regulations in the banking sector with each passing year. AI will assist banks with compliance without herculean manual efforts.
● Compliance tools will be AI-enabled to search for transactions in real time for potential money laundering or tax fraud.
● Regulatory authorities will audit banks automatically with the help of AI, checking compliance instantly.
● Document verification will become easy through AI-driven documents, eliminating the risks of fraud through KYC onboarding.
6. AI will make banking invisible
Banking in the future will be frictionless. AI will make banking a part of everyday life so seamlessly that we won’t even notice we’re banking.
● Auto-savings powered by AI will transfer money to savings accounts automatically without any human intervention.
● AI will forecast your bills and expenses, so you never miss a payment.
● Smart contracts on blockchain networks will automate financial contracts, doing away with paperwork.
For example, while making an online purchase, your bank may pre-approve a short-term loan without you even asking, making checkout seamless.
7. AI-powered investing will overtake human advisors
So far, wealth management has been the preserve of the ultra-rich. AI is set to democratise investing.
● AI-driven robo-advisors will give real-time, customised investment advice.
● AI will monitor market trends, economic happenings, and financial news to give data-driven investment advice.
● Even new investors will be able to invest like experts, courtesy of AIpowered risk assessment.
8. AI will fuel banking partnerships
AI is not only revolutionising conventional banks, it’s revolutionising the financial landscape when it comes to e-commerce as well.
● Online platforms will consolidate AI-driven banking services, where loans, investments, and transactions become seamless.
● AI will enable businesses in an online marketplace to receive instant credit approvals for ramping up business.
For instance, AI would sanction an instant working capital loan to an ecommerce seller when they are fulfilling a high-order volume— paperwork-free and without a delay.
Conclusion
AI isn’t just changing a few elements of banking, but it’s revolutionising it entirely. The future of banking will be hyper-personalised, fraud-proof, completely automated and seamlessly weaved into daily life. Banks, NBFCs, fintech players and online marketplaces that welcome AI will rule the next decade.
