Of late, the banking sector is becoming an active adapter of artificial intelligence — exploring and implementing this technology in new ways. The penetration of artificial intelligence in the banking sector had been unnoticed and sluggish until the advent of the era of internet banking.

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Future Of Arti cial Intelligence In The
Banking Sector (Part-1)
venkat vajradhar
Sep 30 · 4 min read
From electronic trading platforms to medical diagnosis, robot control, entertainment,
education, health, and commerce, Artificial Intelligence (AI) and digital disruption
have touched every field in the 21st century. AI has made its presence felt in all walks
of life due to its ability to help the user innovate. It has also enabled users to make
faster and more informed decisions with an increased amount of efficiency.
Of late, the banking sector is becoming an active adapter of artificial intelligence —
exploring and implementing this technology in new ways. The penetration of artificial
intelligence in the banking sector had been unnoticed and sluggish until the advent of
the era of internet banking.

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One of the first steps was taken in 2015 by Ally Bank (USA) — introducing Ally Assist
— a chatbot that could respond to voice and text, make payments on behalf of the
customer, give an account summary, monitor savings, spending patterns, and use
natural language processing to understand and address customer queries.
Banks all over the world followed up with their best versions of chatbots: Erica to iPAL,
Eva and the most famous one — SBI’s SIA. According to Payjo (the start-up which
developed SIA), SIA can handle up to ten thousand inquiries per second and is one of
the world’s largest deployments of artificial intelligence in consumer-facing banking. In
this era of technological revolution, the banking sector has also witnessed a paradigm
shift in its approach from brick and mortar branches to digital banks. Banks are
increasingly spending on artificial intelligence and ML in data analytics for
personalized and faster customer experiences to garner the interests of the tech-savvy
and the millennial class.
To Know About: Rise of AI-Powered Chatbots in the Banking Industry
According to the FinTech Trends India Report by PwC in 2017, the global spending in
artificial intelligence has touched $5.1 billion. The IHS Markit’s “Artificial intelligence
in Banking” report claims that this cost has grown up to $41.1 billion in 2018, and is
expected to reach $300 billion by 2030. This shows that artificial intelligence has
reached a stage where it has become affordable and efficient enough for
implementation in financial services. The challenge now is in exploring more ways
where the powers of artificial intelligence can be harnessed to streamline internal
banking processes and improve customer experiences.
Front end operations of artificial intelligence are those that involve direct interaction
with the clients. It includes applications and payment interfaces, digital wallets,
chatbots, or interactive voice response systems. Back-end operations are more
complicated as they involve the systematic processing of large chunks or terabytes of
data to provide security to the system, analyze fraudulent transactions, and generate
reports, improve compliance. We shall now discuss the future of artificial intelligence
in each of these fields.
Enhanced Customer Experience
The customer being the key driver of a service industry, customer service is at the
forefront of any business. AI can be used to derive a better understanding of customers
spending patterns, which will help banks customize products by adding personalized

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features. This supplements meaningful customer engagement, building strong
relationships, and growth of business for the bank.
To Know about: Applications of artificial intelligence in banking
For instance, SBI is working on a system ‘Automated Real-Time Customer Emotion
Feedback’ (ARTCEF) using AI to study, in real-time, the facial expressions of
customers. AI can also be used to offer personalized payment experience — like most
suitable EMIs at checkout based on past payment patterns, offering multi-currency
cards to customers who frequently travel abroad, etc. AI can also help in setting up
biometric face recognition ATMs which function without the need of a card, using real-
time camera images and at the same time detect and prevent frauds.
Use Of Chatbots
Chatbots and interactive voice response systems that utilize Natural Language
Processing are increasingly used by banks nowadays to increase the efficiency of
services. It reduces the expenditure on human capital, thus resulting in savings for the
bank. Customer satisfaction is also enhanced as they can avail the service at the
comfort of their homes without having to visit branches — saving their time. Chatbots
can be enhanced in the future to announce new offers to the customer like loans, or to
alert customers if they have any EMI payment due, suggest good discounts based on
the tie-ups the bank has with e-commerce sites, etc.
Data analytics to predict future outcomes and trends:
Effortless and swift processing of a large amount of data can help banks observe the
patterns of customer behavior, predict future outcomes and help them contact the right
customer at the right time with the right product. It can also help in identifying frauds,
fraudulent transactions, and simultaneously detect anti-money laundering pattern on
a real-time basis.
Machine Learning and Cognition can be used to identify suspicious data patterns and
convince banks if the actual source of money is legal or illegal. AI can also study the
past consumer behavior to predict future requirements, which helps banks to up-sell
and cross-sell successfully.
Wealth Management And Portfolio Management
AI-based systems help potential investors by analyzing their salary and spending
patterns. They can also predict market trends and choose the right funds for their

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portfolio by determining the adequate sum of money they should invest every month
in realizing their dreams. All this can be done without visiting branches or hiring
experts. In the world of ‘Banking at your fingertips’, mutual funds, fixed deposits can
be created at home, and the money is redeemed when necessary.
AI can further be leveraged to notify customers instantly for any suspicious transaction
beyond their usual patterns.
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