AI in Banking – How Artificial Intelligence is Used in Banks Posted on : Jan 14 - 2022

Artificial intelligence (AI) technology has become a critical disruptor in almost every industry and banking is no exception. The introduction of AI in banking apps and services has made the sector more customer-centric and technologically relevant.

AI-based systems can help banks reduce costs by increasing productivity and making decisions based on information unfathomable to a human agent. Also, intelligent algorithms are able to spot anomalies and fraudulent information in a matter of seconds.

A report by Business Insider suggests that nearly  80% of banks are aware of the potential benefits that AI presents to their sector. Another report suggests that by 2023, banks are projected to save $447 billion by using AI apps. These numbers indicate that the banking and finance sector is swiftly moving towards AI to improve efficiency, service, productivity, and RoI and reduce costs.

In this article, we will find out the key applications of AI in the finance and banking sector and how this technology is redefining customer experience with its exceptional benefits.

Applications of AI in banking and finance

Artificial intelligence technologies have become an integral part of the world we live in, and banks have started integrating these technologies into their products and services at scale to remain relevant.

Here are some major AI applications in the banking industry through which you can reap the numerous benefits of the technology.  So, let’s dive in!

Cybersecurity and fraud detection

Every day, huge quantities of digital transactions take place as users pay bills, withdraw money, deposit checks, and do a lot more via apps or online accounts. Thus, there is an increasing need for the banking sector to ramp up its cybersecurity and fraud detection efforts.

This is when artificial intelligence in banking comes to play. AI can help banks improve the security of online finance, track the loopholes in their systems, and minimize risks. AI along with machine learning can easily identify fraudulent activities and alert customers as well as banks.

For instance, Danske Bank, Denmark’s largest bank, implemented a fraud detection algorithm to replace its old rules-based fraud detection system. This deep learning tool increased the bank’s fraud detection capability by 50% and reduced false positives by 60%. The system also automated a lot of crucial decisions while routing some cases to human analysts for further inspection.

AI can also help banks to manage cyber threats. In 2019, the financial sector accounted for 29% of all cyber attacks, making it the most-targeted industry. With the continuous monitoring capabilities of artificial intelligence in financial services, the banks can respond to potential cyberattacks before they affect employees, customers, or internal systems. View more