How Useful Is Artificial Intelligence In The Banking Industry?
A new era has begun for banks due to the invention of AI. They have to train their employees in a new way to make the best out of this change. A lot of financial institutions are using AI now. This has helped them reduce the number of man-hours. They can detect various kinds of nefarious activities like fraud. They can also do risk assessments for loans and check whether banking employees are following compliance rules. Chatbots have also come into the picture, which resolves banking inquiries faster than a clerk.
The Uses Of AI In Banks
The banks have to train their employees to use AI. This requires the cultivation of some skills in employees. It involves teaching them how to write prompts in an AI model. Some protocols should also be followed when AI answers a customer's problems; it must be scrutinized so it doesn't reveal confidential information.
Since AI is an intelligent technology, it helps banks to prepare marketing campaigns for prospects. It does so because it's adept at segregating customers based on their demographics, including their incomes.
Moreover, customers don't need to go to the banks anymore to solve their queries. Instead, they can log into the bank's website so that they get answers. Banks also have virtual assistants that can reveal information to customers about their balance; they can provide information about transaction history and whether a certain kind of loan is available. This has alleviated the burden on banking employees.
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How Does AI Do Transaction Processing?
AI ensures that the scanned documents are converted into digital documents, so it has no problem deciphering them. It can then extract all the relevant information required by banks for loan processing.
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AI Helps Detect Abnormalities And Fraud
This ensures that it can check a lot of data for signs of fraud. This data also includes social media activity so that AI can provide proper credit scores for customers who don't have a long credit history. Moreover, AI can help in fraud detection, whether a customer is depositing any amount with incomplete documents. AI can track customers' behavior, which is essential before granting them credit.
Since AI supervises fraud in real time, it can help banks recognize anomalous activity. With predictive analytics being a significant feature of AI, it can also predict loan defaults for customers based on their historical data. This way, customers with bad credit scores can be avoided by banks when granting credit.
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AI Saves Customers From Fraud
If they are conducting any transaction from an unknown location, it means someone has stolen their credit or debit cards. Hence, it saves customers from fraud because banks are alerted in time, and any withdrawals are stopped. Apart from location, AI can also track the customer's transaction frequencies. If the transaction frequency is strange for a customer, AI raises suspicion, making banks stop withdrawals or deposits. It can analyze the daily data of banks with Machine Learning. The bank also monitors the IP address and the type of device used when a transaction happens in Internet banking. If the bank finds anything dubious, it stops the transaction.
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Customer Onboarding
AI can help in process optimization, which means that all those cumbersome processes that are so time-consuming for banking employees can be handled easily with this technology. It can check the papers of new customers and help in onboarding. Based on their documents, it can find out whether they are fit for account opening. In this case, it ensures that customer waiting times are reduced.
There can be human errors committed when a customer deposits a faulty check into a bank, but this is not a problem for the bank. It can also check checks to know whether they have any wrong signatures and if the payee's name is correct. The checks can be deposited issued by the customers for the bank and the bank has to debit the amount from them through their accounts. AI can also check for any mutilation marks and alterations on such checks. Moreover, AI can also help banks do more straightforward tasks, such as data entry for any deposits or withdrawals and making sure that there is account reconciliation.
Sometimes, a customer's internet banking account could be hacked. But AI ensures that they are not able to carry out any transaction. It traces the fraudster's keystrokes, navigation patterns, and mouse movements. If all these things don't match those of the original account holder, the bank freezes the account.
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Prepares Quarterly Reports
This technology can also prepare quarterly reports for banks. This can reduce a lot of man-hours for banks. It can take the earning reports of banks and take out critical details. So, AI helps customers do due diligence before granting any loan. It implies that banks are saved from the hassle of analyzing the documents submitted by customers.
That is how AI is useful in the banking industry.
