Artificial intelligence (AI) in the banking sector has made financial institutions more customer-centric and technologically relevant. Furthermore, it is continuing to strengthen the competitive edge of modern banks in this digital era. Studies reveal that nearly 80% of banks are aware of AI’s potential benefits to their business sector. Reports also indicate that by 2023, banks may invest up to $447 billion in AI apps. In this article at TechTarget, Aileen Scott explains the impact of AI innovation on the banking sector.
AI Innovation & Its Usage in the Financial Sector
Cybersecurity and Fraud Detection
Digital transactions have witnessed a multifold increase as users withdraw money, pay bills, and deposit checks via apps or online accounts. This demands the banking and financial sector to ramp up its cybersecurity and fraud detection efforts. AI innovation helps banks track their system loopholes and minimize risks. AI and machine learning (ML) identify fraudulent activities by scanning transactional data and detecting irregular user behavior patterns.
Enhanced Customer Support Through AI Innovation
Customer support “shapes people’s perceptions of the financial institution’s brand. It also influences banks, client targeting, and retention efforts,” says Scott. With the help of AI chatbots and voice assistants, banks can serve their customers 24/7, irrespective of their time zone or location. In addition, with AI, banks can customize their offerings for their ever-expanding customer base.
Tracking Market Trends
AI helps banks process a large amount of data and predict the latest market trends, currencies, and stocks. Advanced ML techniques allow finance experts to evaluate market trends and suggest investment options to their customers. Due to its high data processing capacity, hedge fund management companies are increasingly using AI models to speed up decision-making.
Improved Risk Management
External factors such as currency fluctuations, political unrest, and natural disasters severely impact banking and financial industries. AI-driven analytics offers a vivid insight into what is to come and prepares organizations to make timely decisions. AI innovation also allows financial experts to identify risky applications by evaluating the probability of a client failing to pay back a loan.
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