How AI is Disrupting the Banking Industry
Artificial Intelligence and Machine Learning have been disrupting several industries in recent years and using these technologies to get menial tasks done is the norm to improve efficiency of resources. Figure 1 shows the predicted spending on AI and cognitive systems in each sector by 2021. AI has penetrated the banking industry to make processes like risk assessment and fraud detection a lot easier. Whether you are in the front office or back office several tasks like conversational banking, anti-fraud and credit underwriting are being handled by AI algorithms. These solutions are real-time and the scope of error is minimal.
Banking industry has always been burdened with vast amounts of data. AI-based platforms have been developed to analyze this data in real-time and reduce the hours spent by employees to go through them. Predictive analysis and anomaly detection are the main use-cases where the banking industry has been able to improve the efficiency of their services through the help of AI. They help in identifying deviations in the patterns of transactions done and helps reduce fraud and identity theft. These can also be useful to provide personalized customer support through the use of chat-bots which can adapt themselves based on the users’ profiles. This also helps improve the customer experience and gain insights of their requirements. Theses solutions can be implemented at all points of the customer’s journey thus maintaining good customer relationships.
Fraud detection systems are placed at the point of sale to detect variations from normal patterns of payment. These systems can help flag transactions for review thus helping banks to react more proactively. Figure 2 shows how AI has impacted each department in banks across USA. Fraud detection and risk assessment are some cases where AI already has a strong foothold, however, with continuous research being done in this field, more algorithms will be developed to make processes simpler and more accurate.
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