As per the World Economic Forum’s latest research, artificial intelligence is already changing the way financial institutions provide more contextualised services to their customers and the banking is no exception. Future customer experiences will be centred on AI. Where every financial institution is competing for diversity of data, managing partnerships with competitors and potential competitors will be critical and will require careful handling.
The Rise of AI in Banking
Strong and speedy process, advent of mobile technology, data accessibility, and spread of open-source software offer AI a huge opportunity in the banking sector.Though AI has been deployed in banking for many years; it remained unnoticed.In the intense app-driven world, the banking sector eyes on leveraging with the assistance of mobile app development companies.
Digital personal assistants and chatbots have transformed the customer services and business communication.From aiding individuals in carrying out daily tasks and giving them a customized experience, virtual assistants and chatbots have many applications. Taking a view of the banking sector, mobile app development services can integrate the AI technology for enhancing services.
Data regarding financial transaction can help the bank understand the collection & expenditure pattern of the customer. The bank can come up with a customized plan accordingly and assist the customers for budgeting and other treasury functions including Credit facilities, Fund Management & Supply Chain Finance.What’s an additional, bank can send the notification about the advice for keeping a check on the expenses and investments based on the data.
Artificial Intelligence based report generation can be used as a tool for better monitoring of transactions by company’s management. Special reports can be generated based on customers’ general payment pattern, which will highlight unusual transactions in terms of amount, beneficiary, payment schedule etc. These reports can be used by Top Management of the company to take informed decision.
The use of artificial intelligence (AI) has been gathering momentum in the Banking sector. Even in 2010, Spanish Banking group Santander had introduced autonomous robots for customer assistance. Another recent example is UAE-based Emirates NBD, which announced AI robots to interact with customers.
In one of the leading banks, cheque authentication today is mostly done not by a human teller, but by an artificial intelligence (AI) system.It has multiple advantages. When someone tries to forge a signature, there are minute fissures, blots or anomalies that may not be visible to the human eye but will become glaringly obvious to a trained bot (software robot). And if the account holder signs in hurry and it’s not quite the same as in the bank’s system, the bot understands it’s actually a genuine signature.Only in instances wherever old age or disability has altered a person’s signature significantly does the bot pass on the query to others.
These days, Indian banks are prominently deploying the chatbots. SBI has also deployed SIA (SBI Intelligent Assistant), artificial intelligence-powered software that has the capability to respond to 850 million queries a day, making it the largest-financial sector AI solution in the world. SIA is a multilingual chatbot which can respond in 14 languages in speech or text. It will enhance the level of customer service by several notches.
ICICI Bank’s AI-powered virtual personal assistant iPal, today addresses over 1.5 million queries a month. The bot answers questions, can also pay bills, do fund transfers or recharge your mobile on your behalf. The bot can also handle complex queries on GST, government digital initiatives, service requests, ATM locations, branch details and IFSC codes.
Bots are also programmed to adjust for human error. Like for a person wanting to ‘recharge’, the bot will even accept text variations like ‘recharg’, ‘rchrg’, ‘recharge’, ‘refill’, ‘add balance’, ‘load mobile’, and ‘top up’. HDFC Bank’s e-virtual assistant “Eva” has been programmed to figure with multiple channels, e.g. the bank’s website, app, Google Assistant and Alexa. Eva similar to so many other chatbots follows the industry norm in being female – can handle 7,500 FAQs and has till date had more than 16 million conversations. She has been integrated with online travel aggregators and service providers, so she can book bus tickets or chart out trips for customers.
Kotak Mahindra Bank’s “Keya” can talk in both English and Hindi. It can recognise customer intent in 75% of cases and can independently conclude over 11% of all calls serviced by the voicebot without any human intervention.
Globally, banking industryis the biggest consumers of technology and among the fastest adopters of new technology. Indian banks are no exception. For them, AI is both about scale (for a large number of retail customers needing a common solution) and about customisation (for corporate customers having specific requirements). AI is being employed across divisions — in reconciliation (ATM reconciliation where balances are settled between different banks and their ATM networks when one bank customer uses another bank’s ATM), in treasury (to predict the possible direction of India’s bond market based on historical data), in fund management (for more data driven, parameters-set trading for wealth management clients), in fraud management (to prevent identity theft, money laundering using deposits or loan fraud) and in regulatory compliance (to assist bank employees, who may not know the entire labyrinth of rules and regulations the RBI has for banks).
In recent times, there has been a lot of buzz on deploying artificial intelligence-based software or a virtual workforce to bring efficiency in operations while reducing operations headcount, error rate, time-frames and increasing through-put in number of clients being on-boarded e.g.
- Automating basic rules for determining client classification type using Artificial Intelligence for regulatory norms such as KYC, FATCA,etc.
- Contributing in credit and legal steps like preparing a credit report and drafting legal documents.
- Account-setup/modification process involves client data being entered in a number of systems. This can be done by a software robot equipped with Artificial Intelligence.
Business Benefits for Banks in deploying AI software –
- Direct headcount reduction through automating manual processes
- Error free business operations
- Higher process efficiency& speed
- Initial capital expenditure but reduced expenditure over a period of time
While Artificial Intelligence has several benefits, there are also a few disadvantages. These softwares may operate in the background or even deep background like internet spiders. This implies that there must be ways to closely monitor these activities that are as transparent as possible. No network is invulnerable, and security may be a major concern for each financial institution. A wide implementation of a high-end technology like AI in India is going to be with a lot of challenges. From the dearth of a credibleand quality data to India’s diverse language set, experts believe a variety of challenges exist for the Indian banking sector using AI.
One of the key challenges is the availability of the accurate data. Data is the essence of Artificial Intelligence, and any susceptibility arising from unverified information is a serious concern for businesses.Imagine for instance, the risks that could arise from KYC compliance AI systems if the data sources are incorrect. Or contemplate the efficacyof a fraud detection AI system without the right kind of data. Organized mechanisms for gathering, validating, standardizing,correlating, archiving and distributing AI relevant data is vital.
India has 150+ languages with sizable spoken population. Applications that use speech to text or text to speech rely on natural language processing (NLP) libraries and techniques.Banks can use the prevailing technologies to start with to support some major Indian languages,however in order to efficiently reach out to extensive population in India; much more advancement is needed on NLP front.
Data access and information privacy is a central aspectof any AI work banks do. These aspects will beof paramount importance with introduction of regulations in Europe like GDPR (General Data Protection Regulation). GDPR regulation is currently applicable to European citizens;however India and other countries have their own data privacy regulations. Banks in India will have to build AI systems with GDPR and similar privacy regulations in mind.
Experts have also stressed the necessity for more skilled engineers to drive the segment.The biggest challenge is the dearth of trained human resources; the existing workforce is not familiar with latest tools and applications.Secondly, the AI technology is animmense threat to redundant work forces in the banking sector.The mass implementation of AI may cause a crucialun employment problem in the sector.
One of the significant challenges that is faced by Industry and not just banks in India is unavailability of people with right data science skills. With only insignificant number of good data scientists available to do AI work, the industry needs to work with universities in India to develop skilled data scientists as well as develop internal training programs to train work forces on data science skills.Also, identification of right use cases for AI implementation with the help of domain experts and data scientists can help banks in successful execution of AItechnologies for banking functions.
Whenever the discussion around AI is brought up, there are concerns that this embrace of intelligence technology could lead to job losses across the industry. During the World Economic Forum’s (WEF) annual conference in Davos, it was predicted that the rise of robots and AI could lead to the loss of 5.1m jobs over the next five years in countries including Australia, UK and US. Legal, business and financial operations were all name-checked by the WEF as sectors that would be affected by this.
Even so, the benefits outweigh the disadvantages. That is why artificial intelligence software is an essential tool in the financial industry. It improves the standard of customer service and administration while lowering cost and provides a competitive advantage in an increasingly competitive industry.
The augmented competition comes up with an opportunity for the service providers to take more risks and emphasise on and experiment with technological leaps. Those establishments that can take risks and escape the adverse impact associated with these new technologies would have a strong advantage over their competitors in terms of expanding their consumer-base and becoming the front runner in the Indian and the global scenario.
It can be assumed that technology, especially Artificial Intelligence, constitute a significant element of the Indian Banking sector, given its reassurance of refined and extended customer satisfaction, operational digitization, minimising cyber risks, and transaction transparency for improved customer-relations.
Artificial Intelligence is in the beginning stage and there is lot of scope for deployment of these softwares in various Banking jobs in the coming years.