Artificial Intelligence (AI) is transforming banking beyond our dreams. From automating routine tasks to enabling data-driven lending, AI is propelling the world banking industry towards increasingly greater levels of efficiency and innovation. This is evidenced by the accelerated growth of ‘AI in banking’ market, which is projected to reach $137.2 billion (equivalent to Rs. 11.9 lakh crore) by the year 2030. Also, 64% of finance services executives think that their organisations require a complete digital transformation. It’s safe to say, therefore, that AI in banking is here to stay.
In India – the country that has the maximum number of digital banking customers, AI plays a key role in bridging the gap between the consumer and financial institutions. Be it fraud prevention, customer care, or lending, AI is making banking accessible and smart. Let’s learn how AI is revolutionising banking and what the future of financial services is going to be like.
AI’s transformative impact on banking operations
One of the most significant contributions of AI to banking is via automation. Banks no longer rely on human intervention for routine and time-consuming tasks. AI systems can now perform it all, from transaction processing to answering customer queries, improving efficiency and reducing costs. According to a report by Citigroup, a stunning 54% of banking jobs could potentially be lost due to AI. A further 12% of jobs could be augmented by AI, highlighting just how big an impact AI will have on banking operations. Here are some ways in which AI is transforming banking operations:
Banks have already begun implementing AI chatbots that offer 24/7 customer service. These chatbots can respond to simple queries such as account balance, transaction history, and loan eligibility, reducing the role of human agents unless a complicated question that needs empathetic handling comes up.
Document verification manually through conventional loan approvals is time-consuming, taking weeks in many cases. AI speeds things up by considering financial records and credit history to ascertain a borrower’s creditworthiness in minutes.
With the rise of digital payments and internet banking, there has been a corresponding increase in scams and fraud. For instance, the global cost of credit card fraud is expected to touch $43 billion (equivalent to Rs. 3.7 lakh crore) by the year 2026. AI-powered fraud detection software tracks millions of transactions in real-time, identifying suspicious behaviour that could pass undetected by humans. This has the potential to significantly lower fraudulent transactions in online banking.
Personalised banking with AI
Gone are the days when banks used to treat all customers the same way. A study by Salesforce indicated that 73% of customers expect to be offered personalised services by businesses. With AI, banks can now offer personalised financial solutions based on individual requirements. Here are a few things that banks are able to do differently with AI:
- Banks today use AI for studying spending and saving records to suggest investments. Robo-advisors recommend the best saving and investment plans based on one’s financial objectives.
- AI is able to predict when a customer will need a loan, credit card upgrade, or investment product, based on their behaviour. This helps banks provide the products to customers at the right time.
- Digital banking platforms use AI to recommend financial products, detect inconsistencies in transactions, and make data-backed budgeting suggestions.
Building financial inclusion
AI is not just personalising banking but also bringing financial services to crores of people who were unbanked. Here’s how AI is building financial inclusivity:
- AI in credit scoring: In emerging economies such as India, the majority of small business owners or farmers cannot get loans since they lack credit history or cannot produce documents such as tax returns or salary statements which are typically used to determine one’s creditworthiness. AI credit-scoring algorithms employ alternative sources of information such as spending habits and bill payment history to determine creditworthiness.
- Voice banking: Non-English speaking customers benefit from the multilingual/vernacular abilities of AI. Voice banking services in regional languages through voice assistants to these customers open up new markets for financial services businesses.
- Microfinance and AI: Microfinance organisations have implemented AI in order to process loan applications and provide financing to farmers and business owners.
Conclusion
AI is revolutionising the banking sector, making it hyper-personalised and secure. Be it automation of transactions or detection of fraud in real-time, AI is revolutionising the functioning of financial institutions. AI is also ensuring financial inclusion, allowing crores of the unbanked to access banking services.
For financial services companies like banks and NBFCs, embracing AI-based solutions is no longer an option—it is a necessity to remain competitive. AI is also enhancing online marketplaces so that digital transactions are more intuitive, safer, and smoother. With advancements in AI, banks and financial institutions will need to balance security, ethics, and innovation.
The future of banking is definitely AI-based, and those who embrace it in a smart manner will be at the forefront of shaping the financial world of the future.
DISCLAIMER – “Views Expressed Disclaimer: This article is not financial advice. Cryptocurrencies are volatile and unpredictable. Due diligence and caution are paramount. Views and opinions expressed are those of the authors and do not reflect the official position of any other author, agency, organization, employer or company, including NEO CYMED PUBLISHING LIMITED, which is the publishing company performing under the name Cyprus-Mail…more
