How Is Artificial Intelligence Used in Banking?

2. Lending Via Artificial Intelligence

For larger financial institutions, manually reviewing every loan application can take a large amount of time. Instead, AI systems for banking can be used to help screen for applicants who don’t meet the necessary criteria for a loan.

From here, those who are able to satisfy the primary criteria can then have their applications reviewed by a banking professional. The algorithms that banks use for this endeavor can also be utilized when it comes to risk management.

For example, accurately assessing a potential financial risk is something that modern AI is completely capable of, allowing financial institutions to protect their assets far more efficiently. Many analysts have also concluded that integrating artificial intelligence into this process allows banks to minimize any occurrence of discrimination.

Overall, using AI during the screening process for loan criteria will help save time for every party involved.

Find out more about Digital Experience in Lending Correspondence

3. Improved Fraud Detection With AI  

It should come as no surprise that artificial intelligence developed for the banking industry has a large number of applications for fraud detection.  Financial institutions can use AI to recognize suspicious behavioral patterns and intervene if an account has been compromised.

Fraudulent activity typically involves an unauthorized user allocating money to unfamiliar accounts. It could also be denoted by someone acting as quickly as possible on the account interface, etc. Or, it may involve making purchases that are inconsistent with what the account owner would typically buy.

More importantly, though, AI-based fraud detection systems can also minimize the number of false positives. It cost banks unnecessary time and money to take action on a user’s account where no fraudulent activity was genuinely present.

Banks can also make use of machine learning to improve the effectiveness of their fraud detection methods as time goes on. This type of artificial intelligence analyzes the user’s past behavior and essentially ‘learns’ from it in order to increase how accurate its results are.

4. Chatbots For Banking Customer Service 

As previously mentioned, artificial intelligence systems for banks can be used to help manage customer relationships. More specifically, however, chatbots can be utilized to enhance the experience that customers have while dealing with AI.

Many financial institutions go as far as to integrate an AI persona to serve as a virtual receptionist for the bank’s clients. By using a chat interface, users can communicate with the AI to answer questions, access different resources, etc.

It is worth noting, though, that the development of the technology behind this type of AI is still in its early stages. So, users shouldn’t expect the program to be able to handle complex requests or tasks.

But it is very useful in resolving minor customer issues as well as in lead generation. To elaborate on this last point, prospective clients of a particular financial institution can learn more about what the bank has to offer by communicating with a chatbot.

This is particularly useful because AI can communicate with customers at any time of the day, something a representative isn’t always able to do.

5. Anti-Money Laundering Technology

Artificial intelligence systems for banking look for different criteria to determine the occurrence of money laundering.

Money laundering efforts are worth trillions of dollars each year. This crime is even more important to monitor due to it being a practice commonly implemented by criminal organizations.

The way that banking AI scans for this type of activity is highly similar to software that detects fraudulent behavior. The end result, though, is that it could play an important role in resolving criminal cases, putting a stop to large-scale money laundering operations, etc.

Additionally, financial institutions are legally required to take certain steps to prevent this crime. So, we can expect artificial intelligence to play an increasingly important role in industry compliance as time goes on.