How Is Artificial Intelligence Used in Banking?
Taylor Pettis January 14th, 2021
Artificial intelligence is a powerful type of software that has a large number of uses in nearly every industry. This is especially true regarding the banking sector, as it comes with plenty of utility that can help optimize certain processes.
But, many people don’t know as much as they should about the potential applications of AI. So, how is artificial intelligence used in banking? We’ve got all the information that you need to keep in mind. Let’s explore everything you should know.
1. AI In Banking Customer Care
Using artificial intelligence to handle customer care obligations is commonplace in many different industries. When it comes to banking, this statement is just as true.
Automated answering systems are used to help customers with low-complexity issues, such as checking their balance, transferring money, etc. In the event that artificial intelligence can’t handle the request, the software will automatically connect them to the appropriate customer service representative.
Having this solution in place will drastically reduce the number of menial tasks that certain employees are responsible for and may even allow banks to eliminate certain positions entirely. With this type of customer service technology in place, banking employees can focus more on their core obligations and perform their roles more efficiently.
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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.
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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.
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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.
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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.
AI Will Play a Central Role In The Future Of Banking
The above information will help you develop a strong understanding of the numerous uses that artificial intelligence has in the banking industry. From here, you’ll recognize potential applications for AI in the banking sector, and make the most of what it has to offer.
Want to learn more about what we have to offer? Find out more about MHC’s banking customer experience software and request a demo to try it first-hand. Feel free to reach out to us today and see how we can help.