With the internet boom, the financial industry entered the digital era. Now with the advent of AI or Artificial Intelligence, traditional financial services are changing. AI is causing a disruption in the structure of the finance industry by taking apart the old components. It is bringing about new and innovative operating models.
Artificial Intelligence is a domain of Computer Science. It works towards building smart machines which function and completes tasks like human beings. These intelligent machines can predict financial outcomes or possibilities by organizing and interpreting information. AI has become an integral part of the BFSI industry. It is bringing a shift in the manner in which financial services are offered.
Financial services are already employing artificial intelligence, and it has become an influential tool. AI can really create a positive impact if used consistently, carefully, and wisely by companies offering financial services. Multiple domains of financial services have implemented AI applications, like Banking, asset management, and insurance.
Using Artificial Intelligence in financial services has its advantages. Automation has helped in increasing productivity and efficiency. It helps to diminish errors or human biases which can be due to emotional or psychological reasons. AI can also detect abnormalities quickly and help in the concision of management information. When a new financial regulation or directive is announced, artificial intelligence greatly helps the senior management to review very high-quality data.
If you are to consider the advantages of using AI tools in Banking, the major benefits are:
- Decrease in operational risks and expenses –
Entering customer information can be time-consuming and error-prone. The use of AI technologies along with RPA (Robotic process automation), like natural language processing, and improved handwriting recognition has reduced the workflow that used to be done by humans earlier.
- Enhanced banking regulatory compliance and fraud detection –
Governments around the world regulate the banking industry to ensure things like customers not using a bank to carry out financial crimes. Non-compliance can turn out to be very expensive for banks. Thus they use AI tools to know about their customers, monitor their transactions, etc. Furthermore, the capability of fraud detection is much higher when AI is used in comparison to detection by humans. Expertly programmed machines can do huge amounts of number crunching and apply various algorithms without any mistakes.
- Enhanced customer experience –
AI technologies have almost removed the need of visiting banks during inconvenient banking hours. There are chatbots on calls helping customers by answering queries and having conversations related to regular banking tasks. Chatbots also help in upselling by making customers aware of new services or offers.
- Automation of the investment and banking processes –
AI is helping banks with their investment banking research and also helping customers take investment decisions. It is also detecting investment opportunities for the banks. Financial companies have also introduced robo-advisors to help customers in creating and manage their investment portfolios automatically
- Better credit and loan decision-making –
AI systems guide banks to make profitable and secure credit and loan decisions. Artificial Intelligence based systems can determine whether a customer is creditworthy by inspecting their financial behaviors and taking even real-world transactions into account without any errors. These systems can also detect if an individual is more likely to default during loan payments.
The article has been published by the editorial board of the Fintek Diary. Happy Reading. For more information please visit www.fintekdiary.com
