7 Different Ways How AI Is Used in Banking

Artificial intelligence can be useful in many industries, and the banking industry is no exception. After all, many financial transactions are happening online nowadays, and some banks don’t even have any brick and mortar locations.

It only makes sense for AI to impact, transform and enhance the banking industry. From chatbots taking care of customer service to virtual assistants helping us make better investments, there are many uses of AI in banking.

Let’s take a closer look at exactly how AI is used in banking:

1. Chatbots are always available to talk to customers

Unlike human customer service representatives, chatbots powered by AI never need to sleep or to take a day off. They are always available to help customers.

Chatbots can answer questions, help customers handle different transactions, and let them know about any additional service they might not be aware of. If a chatbot doesn’t know how to help a customer solve an issue, it will direct their inquiry to a human who will be able to help.

Banking chatbots can even interact with each customer in a personalized way, which can easily improve the banking experience.

2. AI can collect useful data through mobile banking apps

When it comes to offering a personalized banking experience to customers, AI in banking is used to collect and analyze customer data.

When a customer uses a mobile banking app, the data collected by AI is used to understand their patterns, their behaviours and their needs, but also to enhance and simplify the interaction between the user and the app.

The data collected can, for example, be used to help customers make a budget, to send them the notifications that are most important to them, and to recommend them different investment opportunities that should meet their needs.

3. Virtual assistants keep an eye on what customers are doing

Banks use virtual assistants to keep an eye on the behaviours of their customers, not to spy on them, but to prevent fraud, money laundering, and other suspicious transactions.

Banks have to comply to many rules, and they are always dealing with some amount of risk. The government requires financial institutions to make sure their customers are not committing different money-related crimes, and AI can help by keeping an eye on transactions and by reporting anything suspicious or unusual.

When virtual assistants take care of this job instead of human workers, the risks are minimized.

4. AI can help protect customers from fraud

In fact, by keeping an eye on the behaviours of customers, AI is also protecting customers, not only banks.

If, for example, a customer only does small transactions with a few different local companies, but AI suddenly spots a huge transaction with a company based in another country, this transaction will be reported as being suspicious. If the bank reaches out to this customer, and it is confirmed that this transaction was fraudulent, the customer will not be charged unfairly.

AI can also be used to keep the personal data of a bank’s customers safe, protecting them from data and identity theft.

5. AI-based automation can help reduce the operating costs of banks

Artificial Intelligence is not out to steal the jobs of humans who work in banks. But it can be used to automate highly repetitive tasks, so humans can focus on more important, more interesting and more rewarding ones.

Operating a bank involves different processes and a lot of paperwork. When humans count on AI to deal with data, the risk of errors is minimized, and the operating costs of banks is reduced.

This is great for banks, for also for employees who see their tasks simplified, and who can spend their time taking care of tasks that computers are not able to do for them.

6. AI can help banks make better decisions when it comes to credit and loans

When they want to figure out if they should lend money to a customer, banks often take a look at this customer’s credit score and credit history. However, this system is not perfect and can discriminate against many people.

But AI-based systems can help banks make better decisions. They can, again, take a close look at a customer’s behaviours and patterns to determine if they should be allowed to get a loan.

After all, just because a young customer has a limited credit history doesn’t mean they can’t be trusted to repay a loan.

7. AI can help banks and customers find good investment opportunities

Finally, AI can be used to help banks make better investments. AI systems can search for different investment opportunities, select the more promising ones, and let humans take the final decisions.

The same kind of system can also be available for customers who want to build and manage their investment portfolio, but could use some guidance and some helpful recommendations.