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Artificial Intelligence has become an integral part of the most demanding and fast-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 which AI is transforming the banking industry.
AI Minimizes Operating Costs
One of the biggest challenges in the banking sector is managing time-consuming, repetitive tasks like handling paperwork, processing forms, and addressing customer queries. These tasks increase operational costs and are prone to human errors. AI helps eliminate such errors:
- AI-powered automation tools and machine learning (ML) make tasks like loan processing, data entry, and compliance reporting easier. Banks can also save significant costs.
- AI creates new revenue opportunities by helping banks streamline processes and broaden their services.
AI Improves Customer Support
Customer satisfaction is very important in the banking industry. AI improves customer support in several ways:
- 24/7 availability: AI chatbots and voice assistants provide round-the-clock support, resolving queries anytime, anywhere.
- Personalized services: By analyzing customers’ digital footprints and payment behavior, AI helps banks offer tailored products and services.
- Faster response times: AI speeds up query resolution, improving the overall customer experience.
For example, many global banks use AI assistants like Bank of America’s “Erica” to help customers manage finances, track spending, and receive personalized insights.
AI Improves Risk Management
Risk management is critical in banking, and AI has become a game-changer in this domain.
- Credit risk prediction: AI algorithms analyze massive datasets to identify individuals or businesses likely to default on loans.
- Fraud detection: AI tools quickly detect patterns of identity theft, money laundering, and other fraudulent activities.
- Data analysis at scale: AI-powered solutions process data from various channels, offering real-time insights to contain risks.
For instance, JPMorgan Chase uses AI tools to monitor transactions for suspicious activities, preventing fraud before it occurs.
Check the article on: Impact of Blockchain on the fintech industry
Real-World Examples of AI in Banking
AI is already making a tangible impact across leading financial institutions worldwide:
- HSBC: Uses AI to monitor billions of transactions annually to detect fraud.
- Wells Fargo: Implements AI chatbots to improve customer interactions and resolve queries effectively.
- Citibank: Uses machine learning to analyze loan applications and detect credit risks.
- Capital One: Employs AI to offer personalized customer experiences, including spending insights and budgeting assistance.
AI Provides Better Regulatory Compliance
The banking industry is one of the most highly regulated sectors globally, requiring institutions to follow stringent laws and guidelines. AI simplifies and strengthens regulatory compliance by:
- Automating the monitoring and reporting of noncompliance issues.
- Keeping workflows up-to-date with changing regulations.
- Ensuring faster identification and resolution of deviations or illegal activities.
Read our article on RPA changing banking
Conclusion
The future of banking is now. As the world is moving quickly toward complete digital transformation, advanced technologies like AI will be a mandate 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. We can help you transform and modernize core banking operations while empowering you with data-driven insights and the right tools to excel in today’s digital landscape.