Since its introduction, artificial intelligence has been paving the way for several industries by providing extensive data analysis tools. Automation of the previously manual banking systems has accounted for better customer interaction, ease in monitoring and control, as well as better profits.
Also, instead of customers having to go to banks and wait in long queues, AI has helped provide the facility of carrying out their desired tasks from the comfort of their homes. Automated digital banking platforms offer a variety of functionalities to customers as well as protecting their data.
The banking industry benefits from AI in the detection and prevention of fraud, as well as fulfilling KYC compliance guidelines. AI makes the use of technologies like machine learning, deep learning and predictive analytics to secure and improve the digital banking platforms.
In the last two decades, AI has transformed the banking sector, and the development in internet services have made it possible for customers of all regions to use digital platforms. This is why mobile banking apps were introduced, and now it’s a competition between different banks to provide the best apps.
Mobile banking is the best known application of AI in the banking industry. To provide the best experience to their customers, banks strive to incorporate technology and design the best mobile banking applications. These applications provide the functionalities of making transactions and payments, and are usually available 24/7. Also, the banking staff are provided with tools to carry out complex tasks. According to a survey, 75% of banks already use AI to improve and secure their systems.
Financial institutions like banks are at constant risk of crimes and frauds like money laundering and hacking of sensitive information. The use of AI prevents financial frauds by detecting unusual activities. The use of machine learning algorithms allows digital banking systems to analyze extensive information and monitor trends in account activity and transactions made.
Payment frauds are effectively prevented with the use of trend-based analysis and newly collected data to detect suspicious activities in transactions. Since the complexity of payment frauds is increasing, AI is considered the vital technology to provide solutions to detect fraudulent activities.
In some cases, predictive models alone cannot detect the digital sequence that payment fraud attacks have. However, AI can analyze large chunks of data to detect even the slightest variations from normal activity. Even anomalies in large datasets can be determined using machine learning algorithms, hence making the digital banking atmosphere fraud free.
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Apart from reducing financial fraud, AI also helps reduce costs. Banks cut costs in their processes by using AI to automate the process of document digitization and document verification, as well as other processes that previously required considerable human effort.
The time and cost spent in manually digitizing, identifying and implementing document templates is reduced, hence improving the productivity. This automated process gives banks the opportunity to get more tasks done by assigning tasks to employees on more important projects. Since the use of paper currency is being reduced with the use of digital fund transfers and payments, the costs for minting of currencies is also significantly reduced.
Also, AI helps reduce human error, which also adds to the cost when it’s unavoidable. Human error is one of the main causes of data breaches, and automation solves this problem because machines don’t leave loopholes in processes. Without increasing the costs, errors are eliminated and all kinds of unstructured data are also handled.
Compliance regulations are always putting pressure on banks in order to protect them from frauds and reduce crimes like money laundering and tax evasion in the financial system. Non-compliance with these guidelines often result in banks having to pay huge penalties. AI allows digital banking platforms to track transactions and monitor customer behaviour to calculate risks involved.
In this way, banks stay updated, protected and also comply with the necessary guidelines. AI systems using deep learning can even detect the changes or updates in the guidelines and make the necessary adjustments accordingly. The use of AI empowers banks and helps them remain compliant with regulations while establishing trust of their customers.
The most obvious advantage of digital banking is the ease of access and availability. As mentioned earlier, it provides the comfort to perform edd banking tasks from home, and is available round the clock. It reduces the required paperwork as documents are also digitized for easier information gathering.
Also, digital banking makes paying the regular bills easier and the services are available even in remote areas, providing functionalities to more people.
Implementing proper verification services in these digital platforms reduces fraud in banking. Additionally, the chances of misplacing credit cards are reduced, and even if customers lose their cards, they can be instantly reported using digital banking platforms.
Even with this much technological advancement, digital banking will still take time to completely replace physical banking. This is because there are also those customers that prefer human interaction in matters like loans and negotiations. But with technology being adopted in every sector, there will eventually be a time when the majority of customers will look towards personalized digital banking platforms.
To sum it up, banks use AI to improve their digital platforms for better customer experience such as 24/7 services anywhere around the world. AI in digital banking platforms has further improved the security provided to the customers while improving the speed and efficiency of online banking operations.