back Back

5 applications of Artificial Intelligence that are disrupting the banking sector

By Joy Dumasia

April 12, 2022

  • AI
  • AI/ML
  • Applications
Share

The adoption of AI in different enterprises has increased due to the COVID-19 pandemic. Since the pandemic hit the world, the potential value of AI has grown significantly. The focus of AI adoption is restricted to improving the efficiency of operations or the effectiveness of operations. However, AI is becoming increasingly important as organizations automate their day-to-day operations and understand the COVID-19 affected datasets. It can be leveraged to improve the stakeholder experience as well.

Artificial Intelligence (AI) has been around for a long time. AI was first conceptualized in 1955 as a branch of Computer Science and focused on the science of making “intelligent machines” machines that could mimic the cognitive abilities of the human mind, such as learning and problem-solving. AI is expected to have a disruptive effect on most industry sectors, many-fold compared to what the internet did over the last couple of decades. Organizations and governments around the world are diverting billions of dollars to fund research and pilot programs of applications of AI in solving real-world problems that current technology is not capable of addressing.

Artificial Intelligence enables banks to manage record-level high-speed data to receive valuable insights. Moreover, features such as digital payments, AI bots, and biometric fraud detection systems further lead to high-quality services for a broader customer base. Artificial Intelligence comprises a broad set of technologies, including, but are not limited to, Machine Learning, Natural Language Processing, Expert Systems, Vision, Speech, Planning, Robotics, etc.

The following are 5 applications of Artificial Intelligence that are disrupting the banking sector:

  • Robo Advice

Automated advice is one of the most controversial topics in the financial services space. A robo-advisor attempts to understand a customer’s financial health by analyzing data shared by them and their financial history. Based on this analysis and goals set by the client, the robo-advisor will be able to give appropriate investment recommendations in a particular product class, even as specific as a specific product or equity.

  • Customer service/engagement (Chatbot)

Chatbots deliver a very high ROI in cost savings, making them one of the most commonly used applications of AI across industries. Chatbots can effectively tackle most commonly accessed tasks, such as balance inquiry, accessing mini statements, fund transfers, etc. This helps reduce the load from other channels such as contact centres, internet banking, etc.

  • Credit Scoring / Direct Lending

AI is instrumental in helping alternate lenders determine the creditworthiness of clients by analyzing data from a wide range of traditional and non-traditional data sources. This helps lenders develop innovative lending systems backed by a robust credit scoring model, even for those individuals or entities with limited credit history. Notable companies include Affirm and GiniMachine

  • General Purpose / Predictive Analytics

One of AI’s most common use cases includes general-purpose semantic and natural language applications and broadly applied predictive analytics. AI can detect specific patterns and correlations in the data, which legacy technology could not previously detect. These patterns could indicate untapped sales opportunities, cross-sell opportunities, or even metrics around operational data, leading to a direct revenue impact.

  • Cybersecurity

AI can significantly improve the effectiveness of cybersecurity systems by leveraging data from previous threats and learning the patterns and indicators that might seem unrelated to predict and prevent attacks. In addition to preventing external threats, AI can also monitor internal threats or breaches and suggest corrective actions, resulting in the prevention of data theft or abuse.

ALSO READ: Applications of Artificial Intelligence In Banking Q1 2022

Previous Article

April 12, 2022

Finastra announces Banking as a Service collaboration with Microsoft for SMEs

Read More
Next Article

April 12, 2022

LenDenClub launches FinTech venture fund for seed and pre-series start-ups

Read More






IBSi Daily News Analysis

UK, Bank

July 12, 2024

AI

Global securities lending revenue sees sharp 16% decline to $2.53bn in Q2 2024, study shows

Read More

IBSi FinTech Journal

  • Most trusted FinTech journal since 1991
  • Digital monthly issue
  • 60+ pages of research, analysis, interviews, opinions, and rankings
  • Global coverage
Subscribe Now

Other Related News

July 11, 2024

RAKBANK to enhance banking operations with Microsoft AI

Read More

July 05, 2024

LoanOptions.ai brings bank statement analysis tool to track customer expenses

Read More

June 28, 2024

Bank Negara Indonesia taps Cloudera to digitise its business transformation

Read More

Related Reports

Sales League Table Report 2024
Know More
Global Digital Banking Vendor & Landscape Report Q2 2024
Know More
Wealth Management & Private Banking Systems Report Q2 2024
Know More
IBSi Spectrum Report: Supply Chain Finance Platforms Q4 2023
Know More
Treasury & Capital Markets Systems Report Q1 2024
Know More

IBSi Sales League Table

The industry acknowledged barometer of global banking technology vendor performance!
Get your copy now!
close-link
Get your copy now! IBSi Sales League Table 2024