Artificial Intelligence has become an integral part of the most demanding and faced-paced industries. Artificial intelligence (AI) and Machine Learning (ML) in the manufacturing industry have produced many incredible results by increasing efficiency to a sky-high level. These industries successfully use AI to drive enterprise growth, profitability, and sustainability in this fast-paced digital world. Among these, one prominent industry where AI has undeniable huge potential is the banking industry. According to a report by Mordor Intelligence, the global AI fintech market was estimated at USD 6.67B in 2019 and is predicted to reach USD 22.6B in 2025. The rise and the impact of Artificial Intelligence in the banking and financial sector has been phenomenal and it is completely redefining the way banks work, create products and services, and how they transform the customer experience. Here are a few ways how AI is transforming the banking industry.
AI minimizes operating costs
One inevitable thing the banking sector has to deal with is the paperwork. Banking employees need to handle loads of paperwork daily. Such time-intensive and repetitive tasks can cause an increase in operational costs and are more prone to human errors. This can be solved with the use of AI. It eliminates these error-prone and time-consuming human processes. A research report published in Business insider suggests that by switching to an AI banking system, banks can save an estimated amount of USD 447B by 2023. For instance, with the help of machine learning (ML), automation tools, and AI assistants, banks can streamline many aspects of human jobs. AI also plays a crucial role in enabling banking institutions to add a new spectrum to their existing array of operations, thus reducing operating costs as well as providing new opportunities for revenue.
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AI improves customer support
The impact of Artificial Intelligence in banking, especially in the customer support segment has helped the financial institutions shape customer’s perception of them. Customer satisfaction directly impacts the performance and revenue of any organization and the banking industry is not an exception. With the help of AI chatbots and voice assistants, banks are now able to serve their customers 24/7 irrespective of their time zone or location. Moreover, using AI and ML for faster and granular analysis, banks can effectively address the customer’s need by drawing compelling insights from the customer’s digital footprint and payment behavior. AI also helps customize the bank’s offerings for an entirely different audience, ever-expanding their existing base. Thus, AI helps financial institutions in providing their clients with the right services when they need them most.
AI improves risk management
In banking, AI is a major game-changer in risk management. Financial institutes like banks are prone to risk due to the type of data they handle each day. For example, banks employ AI-powered solutions that can analyze data in massive volumes and can quickly spot patterns from several channels. This helps predict and prevent credit risks and can identify individuals and businesses who might default on their obligation to repay their loans. It can also identify malicious acts such as identity theft and money laundering. AI tools and algorithms have revolutionized risk management in providing a safer and more reliable banking experience. Thus, it is clear that the impact of Artificial Intelligence in banking has improved risk management.
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AI provides better regulatory compliance
This is one of the most overlooked impacts of Artificial Intelligence in banking. The banking industry is one of the highest and strictly regulated industries globally. Banks need to comply with strict laws, regulations, and guidelines to prevent, detect and address any and all deviations, illegalities, and nonconformities in their operations. Moreover, compliance regulations are subject to frequent change and banks need to constantly update their process and workflows in accordance with these regulations. But by harnessing the power of AI in regulatory compliance, banks can simplify, automate and streamline the regulatory compliance activities and workflows. Thus, by strategically leveraging AI-powered regulatory compliance solutions, banks can overcome the daunting regulatory compliance challenges faced today.
The future of banking is now. As the world is pacing briskly towards complete digital transformation, advanced technologies like AI will be an even bigger imperative for the banking industry in the future. Thus, the impact of Artificial Intelligence in Banking is huge and it will continue to play a huge role in the banking industry providing more flexible and agile business models for growing needs in this digital world. At Intone, we provide innovative expertise and capabilities needed to deliver the future of banking today. Whether we’re helping to transform and modernize core banking operations, enable a mobile banking experience to become a social one, create world-class payment and credit processes, or provide data monitoring, analytics, and quality assessment and compliance and assurance reporting, our banking consulting services empower our clients with data-driven insights and the right tools to excel in today’s digital landscape.