The Finance & Banking industry has experienced numerous technological advancements in recent years. One of the most significant advancements in the industry is the use of Artificial Intelligence (AI). AI has helped in improving the efficiency and trustworthiness. Banks and Financial Institutions have been able to reduce the cost substantially and hence increasing the profit by implementing process automation. AI has revolutionized banking & finance, & the benefits are evident in various ways. From fraud detection to customer service, AI is helping the industry to provide better & more efficient services to customers. Almost 50% of banks and Financial Institutions are using AI to harness Next generation banking. Examples include auto calculation of Interest on Loan, Documentation, etc. Predictive analytics, Voice recognition tools, AI chatbots are few applications which are some of the examples of AI in banking. In this blog, we will discuss in detail about how AI is helping in banking & finance, its use cases & how Bluelupin is involved in providing solutions for the industry.
Listed below some of the advantages of AI and machine Learning in operating the Banking and Financial Institutions
One of the biggest challenges faced by banks is fraud. The amount of fraudulent activities happening every day is alarming. In this digital age, fraudsters are becoming more sophisticated, & traditional methods of detecting fraud are no longer effective. This is where AI comes in. AI-powered fraud detection systems can analyze vast amounts of data & identify patterns that may indicate fraudulent activity. These systems can learn & adapt to new patterns, making them more effective over time. Machine Learning can detect fraud by using different algorithms from massive volume of data. With the help of this the financial institutions can keep a check on number of logins, transaction Details, customer behavior and help in minimizing risk of fraud which would have been very hectic task to handle manually.
Regardless of the Number of User AI system can detect fraud instantly since machine learning can access big data and also can learn from results.
Machine Learning is helping to recognize large number of user activity, validation of those , and responding to cyberattacks efficiently. Automated fraud detection is also easily possible since patterns of abnormalities are identified easily and quickly by machine learning. It can help in increasing approval accuracy in real-time, and the overall regulatory compliance can also be improved.
Customer service is a critical component of the banking industry. AI is helping banks to provide better customer service by providing personalized & timely responses. Chatbots powered by AI are being used to provide customer support services 24/7. These chatbots can answer questions, provide information, & even help customers with transactions. The use of AI in customer service has significantly reduced the response time, making it more efficient & cost-effective.
With the help of AI banks can understand their customer behavior and hence can offer them tailor-made services. For example bank can asses all information of a particular customer, analyse the risk factors, study solvency pattern and hence offer him a tailor made loan for the particular customer and meet customer expectation in real-time basis.
At the same time the customers are also able to make better decision using automation system of machine learning based budgeting tools, interest rate calculators and make financial decision.
Risk management is essential in the banking & finance industry. Banks need to identify & manage risks to protect their assets & ensure financial stability. AI is helping banks to identify risks by analyzing vast amounts of data & detecting patterns that may indicate potential risks. These systems can provide real-time risk analysis, making it easier for banks to manage risks effectively.
Dataminr and Alphasense are AI paltforms for event and Risk Detection. Dataminr claims that it is successful in finding breaking news long before they make headlines.
Dataminr is based on a technology with helps in giving alerts to the clients so they can respond to difficulties efficiently in real time.
Alphasense approach is unique. It offers a search engine for investment and advisory firms, international banks, and businesses and hence saves time by pointing out important data parametres. It uses Natural Language processing to track pattern from prior wins and failures.
Investment management is another area where AI is making a significant impact. AI-powered systems can analyze market trends & make predictions based on historical data. These predictions can help banks & investors make informed decisions about investments. AI can also help in portfolio optimization, making it easier to manage investments & achieve better returns.
Various Online tools such as robo-advisors offers automatic financial advice and support. They use algorithms and data to automatically create and manage client’s portfolio. These tools makes the process of investing decisions simpler which can otherwise be a long process of studying and deciding things manually. In addition to this using these tools are really cost-effective since most of them have a very minimal account management fees. Moreover with the help of these tools financial institutions can also offer portfolio management and financial Counselling onlone on web or on mobile app hence making it convenient for the customers.
Easier Onboarding of New Customers
Documentation has really been a hectic activity for all departments. It’s a time-consuming and labor-intensive procedure.
Machine learning has speed up the process lately of classifying, labeling, and processing documents in a proper sequence.
Optical character recognition (OCR) is scanning process which can be applied to all the documents to determine the context.
The machine learning model helps in classifying and indexing everything.
AI has helped in effective and scaling operations by reducing the efforts in onboarding and hence customers can open accounts through scanner online in few minutes.
It has been beneficial to the banks also so as to increase and diversify their business as well.
Some of the Applications of Artificial Intelligence in Banking
They help in delivering a very high ROI by saving costs making them the most favourite and the most commonly used AI. Chatbots are highly efficient in looking after tasks such as balance enquiry, mini statements, fund transfers etc. It has reduced substantial load from dependency on manpower.
A robo-advisor understands a customer’s financial status by analysing the predictive data with the help of financial history. Based on this it helps in seeing and provides recommendation on financial products which helps the customer making a decision ina convenient way without contacting an agent.
General Purpose or Predictive Analytics
General Purpose or natural language processing are The most common use which broadly applies predictive analytics. It can detect patterns and correlations. These patterns can help indicating sales and cross -sales opportunities, analysing operational data.
AI is significantly helping in improving the effectiveness of cybersecurity systems by analysing data from previous threats and learning the patterns that might prevent data threats. AI also helps in checking internal data threats fraud detection etc.
AI is transforming the banking & finance industry, making it more efficient & customer-oriented. From fraud detection to customer service, AI-powered systems are providing banks with the tools they need to stay ahead of the competition. Bluelupin is at the forefront of providing AI-powered solutions for the banking & finance industry. With its cutting-edge technology, Bluelupin can help banks & financial institutions in various ways, including fraud detection, customer service, risk management