Use of AI in Banking- How Indian Banks Are Leveraging the Power of Artificial Intelligence (2024)

Artificial Intelligence crashed onto Earth in 2023 with an equivalent force of a humongous Meteor from outer space. The technological aftermath has impacted every industry from healthcare to banking and financial services. Adaptive use of AI is especially being found to streamline and transform the delivery of banking services to customers across wide demographics.

The strategic applications of AI in banking through machine learning (ML), natural language processing (NLP) and robotic process automation (RPA) are witnessed globally. As per Accenture reports, Indian banks can serve more customers simultaneously through a significant increase in transactions and digital interactions deploying the use of artificial intelligence in banking services. Let’s dive into how your favourite Indian banks are integrating AI and what critical transitions we can expect in the near future.

Golden Opportunities for the Adaptive Use of Artificial Intelligence in Banking Services

In the latest report by McKinsey, it was revealed how the potential of AI applications in banking and finance would steadily grow to a $1 Trillion economy. Top analysts from Cambridge have also pointed towards the clarity of how the success of AI applications in banking depends upon colossal data, and banks already have them securely stored in their arsenal.

Slow adaptation of ML technology in banking was already witnessed by top payment companies before 2023 for the detection & prevention of fraudulent transactions.

But here is an insightful list of applied segments which Indian banks are already encashing upon as part of their early-phase AI adoption:

Customer Service Enhancement- In a competitive and changing market, customer satisfaction and segmentation are essential for retaining and drawing customers. AI can be a game changer by helping Indian banks offer personalized, convenient and dependable services that meet the needs and expectations of the largest population in the world.One of the top examples of artificial intelligence in banking is how SBI has already improved customer service by introducing an AI-based chatbot named SIA. Chatbots remain available 24/7 and customers are becoming more comfortable with them to solve basic queries and fulfill standard banking tasks. Banks are also becoming more adept at employing chatbots to inform their clients of other services and opportunities.
Intelligence-powered Credit Decision-making- Some banks still limit their ability to assess a person's or business' creditworthiness to using credit scores, credit histories, customer references, and banking transactions.In addition to analyzing available data, AI-based loan decision systems and machine learning algorithms can examine customer behaviors and patterns to determine whether a customer with a spotty credit history would actually make a good credit customer or to identify customers whose behaviors might make them more likely to default. Top private banks like HDFC, Axis and ICICI are analyzing ways to adopt such technology.
Investment Automation- The use of AI in banking can provide banks with worthwhile insights. Data-driven decisions for product development, marketing strategies, and risk management are even made possible by being able to recognize patterns in consumer behavior, forecast market trends, and manage risks.Banks have always desired the presence of a smart system assistant which will support their investment banking research, thanks to the use of AI in banking, it’s now a reality.One prime example of artificial intelligence in banking is how many financial service companies have deployed robo-advisers to assist their customers in portfolio management. Banks like South Indian Bank and ICICI have displayed great interest in the investment automation use of AI in banking services.
Minimizing Risks and Overhead Costs- Although the banking sector operates digitally in the majority, it is nonetheless rife with manual, occasionally paper-intensive operations that rely on people. Due to the possibility of human mistakes in these procedures, banks face inflated operational costs and higher risks.By integrating Robotic Process Automation (RPA) as a variant of AI in streamlining services and internal report generation, Indian banks are set to embark on a revolutionary path. Use of AI in banking may now complete the application in a matter of hours.RPA can communicate with several systems at once to validate data, such as required paperwork, background checks, and credit checks, and make decisions about whether to accept or reject applications in accordance with set standards.
Robust Fraud Detection and Regulation Compliance- Massive amounts of data may be analyzed in real-time by AI algorithms to spot patterns and uncover fraud. They can quickly notify banks of probable fraud, minimizing losses and safeguarding the interests of clients.The only abnormalities that traditional rules-based solutions can identify are those that they have been designed to look for. Artificial intelligence models employ sophisticated ML algorithms that continuously monitor changing fraud tendencies and learn by analyzing historical data. With little to no human involvement, machine learning can also create predictive models to reduce the risk of fraud.If banking regulatory compliance is not followed, there are huge costs incurred as well as combined liability. In order to track transactions, maintain tabs on client behavior, and audit data to various compliance and regulatory systems, AI applications in banking now include intelligent virtual assistants.

Use of AI in Banking- How Indian Banks Are Leveraging the Power of Artificial Intelligence (1)

Global Examples of Artificial Intelligence in Banking

Capital One (Virginia)

Eno, an AI-powered virtual assistant that consumers can connect with through a mobile app, text message, email, and on a PC, was released by the bank. Eno handles operations including paying credit cards, maintaining account balances, examining available credit, and verifying transactions. This is among the fine examples of artificial intelligence in banking that enables users to text questions and receive fraud alerts.

Ally Financial(Michigan)

How State Bank of India(SBI) is using AI?

SBI proudly claimed in its annual report (June’23) that it has deployed revolutionary technologies like artificial intelligence (AI), machine learning (ML), and business analytics to expand its product offerings and improve customer satisfaction.

The top public sector bank in India is also committed to implementing the NextGen Data Warehouse in addition to Data Lake and investigating fresh collaborations with fintechs and NBFCs for co-lending. The next version of YONO app from SBI will prioritize customer-centric design, hyper-personalized experiences, and innovative product offerings through the utilization of AI/ML.

ILA, the Interactive Live Assistant for SBI Cards, can give you the most relevant details on goods and services. To learn about Card features, advantages, services, and much more, anyone can chat effortlessly with ILA. The adoption of this Generative Conversational AI system has also assisted them in generating over 130,000 leads to date, increasing top-line income by thousands of dollars.

What is the use of AI in HDFC Bank?

In terms of market capitalization, HDFC Bank is the largest bank in India and the fourth-largest bank worldwide. HDFC Bank has been vocal and positive about incorporating Artificial Intelligence in diverse banking services, here are some ways they have already implemented the use of AI in banking services:

Conclusive Note

The use of artificial intelligence in banking is expected to drastically change India’s banking and financial services sector. It presents several chances to improve customer satisfaction, boost operational effectiveness, control hazards, and stimulate innovation.

Another vital aspect of embedding AI in the banking sector is educating staff members and raising public knowledge of the new technology. With the visible efforts and enthusiasm from Indian Banks, we can be hopeful to witness an AI-powered dynamic ecosystem to transform service structure and delivery.Visit adneto.in to further learn about how we can help banks & brands in tandem.