Artificial Intelligence - Next Big Thing

Artificial Intelligence is all about creating and developing machines that act, behave, react and work like human beings themselves. These machines are designed in such a brilliant manner that they are capable of performing activities like Speech Recognition, Learning, Planning, Problem Solving etc.

Artificial Intelligence is basically a simulated kind of intelligence which is being used rapidly in machines these days.

As technology increased at such a fast pace, people started to think that human intelligence if embedded in machines, can do wonders as a lot of human labor can be reduced and highly advanced mechanics can be used effectively.

 This is when massive research started on Artificial Intelligence technology and today, it has emerged as a strong domain in the technological sector. Artificial Intelligence not only reduces the risk of human error but also serves as a highly developed mechanism that can outrun the limitations of the human mind.

Artificial Intelligence in Financial Service

Artificial Intelligence: Meaning and Importance

Artificial intelligence (AI) is an upcoming technology in banking industry. Artificial Intelligence means the ability of machines to intermingle and learn to do tasks previously done by humans. Through AI the machines can interact and natural language can be processed faster which will help in arriving at the decision or results more accurately.

As more data is processed machines learn and improve themselves and arrive at a more positive result.

The need for AI is mushrooming because the characteristics of various data available, collaborating such data into understandable form, business needs, availability of new technologies and rising competition. AI helps businesses in such collaboration of data. As banking industry handles huge amount of data AI has become a necessity.

 

Artificial Intelligence in Banking Industry

• Many banks around the globe are adopting AI technologies.
• The benefits of AI in banks are widespread, reaching from back office operations, compliance, risk management, credit management and to many more arenas.
• This adoption will help banks to gain a strategic edge over the other banks that are not willing to adapt the changes in banking industry including implementation of AI.
• Firms not willing to adopt AI will be required to face challenges such as fear of system failure and regulatory compliance.

 

Importance of Data

Data is being collected, analyzed and applied to solutions more extensively and faster than ever before. AI makes it possible to automate vast amounts of data, analyzing and applying it at record speeds. The challenges that remain in banking sector is the absence of people experienced in data collection, analyzing the same and arriving at the conclusion.

 

Advantages of Artificial Intelligence

As AI tends to be a new trend in banking industry it does have a few criticisms in terms of security and job loss, but it also has benefits attached. The following are the benefits of AI in banking industry:

 

1. Growing Personalized Customer Communication

According to the report on 2017 Retail Banking Trends and Predictions a renewed focus on the customer experience was observed.

 In another Digital Banking Report, The Power of Personalization in Banking, it was found that consumers were willing to share their personal information if they can receive custom advice, offers and service based on this shared insight.

Personalized communications and advice as enabled by AI can be reflected by online wealth management services that provide automated, algorithm-based portfolio management advice without the help of a human counterpart.

Beyond online advising, many other of the larger financial institutions are using AI to improve the personalization of offers and communication.

 In future, it is believed that custom marketing and solution development to improve the customer experience will be the primary objective of the organizations.

2. Reduces Duplication of Work

AI can reduce the repetitive processes especially in the back offices of banks and make them both more efficient and effective.

This reduction in duplication of work will helps the banks to focus more on customer communication and will also help to allocate and realign workforce where required. 

Earlier such personalization was almost impossible to achieve without the benefits of machine learning and AI. AI can handle customer grievances and “Frequently Asked Questions” with utmost accuracy.

3. Detection of Fraud

Banks are vulnerable to frauds. AI in banking can be used to detect frauds in real time. Using AI account activity can be monitored, patterns can be established, servicing of interest can be checked and any reservations can be communicated quickly. AI can respond to frauds quickly than any other normal procedure.

4. Growing Customer Recommendations

AI provides the ability to have improve customer recommendations and advice. Many mobile banking apps have been developed by banks to improve recommendations and advices to customers like Moven and Simple. They track customer’s spending and increase their savings with personalized recommendations via a debit card linked with their smartphone app. AI can make wonders in this segment of customer recommendations, as advice needs to be real time, the ability of humans to provide real time advice or recommendations related to products is poor. Hence AI without wasting time can arrive at accurate advice or recommendations.

5. AI- The NEXT BIG THING

Banking industry is rooted in risk and fraud detection and cost reduction, AI is increasingly important for financial services firms to be competitive. Today most of the next generation customers are unwilling to go to the banks for any activity, they want to do it by just one click on the internet. In this changing scenario AI is going to be the next crucial innovation in banking industry throughout the globe. However, according to Narrative Science, roughly 10% of the organizations are using AI to compete with peers and identify opportunities in their data that would otherwise be missed. This is just the tip of the iceberg. Certainly, ARTIFICIAL INTELLIGENCE is the “NEXT BIG THING” in banking industry.