Artificial Intelligence is one of the most powerful tools that can shape the business world of today. AI has found its place within nearly every industry, from smart home devices to self-driving cars. AI is now a part of everyday life, beyond just a trend. Users expect chatbots to give quick answers and understand their needs even before they say them clearly. Today, 75% of people navigate using AI, 70% rely on virtual assistants, and in 2023, over 250 million people used AI tools.
Since its emergence, AI has really changed the way businesses work and help their customers. In banking, it’s making a big difference in how financial institutions serve people, handle risks, and keep up in today’s digital world. Many top banks are now using AI to do everyday tasks faster, make their systems more secure, and make smarter decisions. In this blog, we look at the real-world application of AI in the banking and finance industry.
Application of AI with Real World Example
AI is quickly becoming a key part of today’s banking world. Banks and financial companies everywhere are using AI to make their services better, offer smarter products, and run their operations more smoothly and efficiently. Below are some of the key applications of AI that are shaping the future of the banking industry.
Fraud Prevention & Risk Management
In the time where all payments are made digitally, millions of digital transactions occur on a daily basis as users pay their bills and transfer funds using mobile and internet banking. With the huge numbers of transactions being conducted, there’s also an increased risk of getting malicious attacks.
AI technology has capabilities to process huge data which enables banks to effectively monitor any kind of malicious attack and identify vulnerabilities in real time. Taking a look at a real world example, Danske Bank in Denmark has already implemented AI on their system. The advanced fraud detection algorithm powered by deep learning helps the bank achieve a 50% improvement in fraud detection rates and a 60% reduction in false positives.
Similarly, the American multinational finance corporation, JPMorgan Chase uses AI to spot malware, trojans, and phishing attacks. Their system can warn the team even before hackers send harmful emails. Their research shows that a trojan can take around 101 days to break into a company’s system. Thus, it gives an early warning and alerts the bank’s security team as soon as hackers start planning to send harmful emails.
Chatbot
Chatbots are one of the best uses of AI in banking. They work 24/7, so customers get help anytime without delay. This constant support boosts customer satisfaction. For example, Erica, the virtual assistant introduced by Bank of America helps customers manage credit card debt, update card security settings, and much more. In 2019, Erica handled over 50 million requests showing how powerful AI chatbots can be.
Loan and Credit Decision
As mentioned earlier, AI can easily process huge amounts of data in a short time. Thus, the banking industry can effectively use it to process credit decisions. In 2019, Upstart became one of the first U.S. lenders to use AI for credit decisions. Instead of just checking credit scores, it looks at over 1,000 details like education, job history, and spending habits. This helped them approve more loans with fewer defaults, especially for young people with little credit history. AI helps make smarter and safer lending choices by spotting patterns that traditional methods miss. It gives a more accurate picture of someone’s creditworthiness—even without a long credit record.
Customer Experience
The integration of AI in banking and finance services further enhances the consumer experience and increases the level of convenience for users. Many European banks use AI chatbots to handle millions of customer queries each year, cutting service costs by up to 30%.
Investment banks like Goldman Sachs and Merrill Lynch has also started deploying AI in banking operations. Merrill Lynch uses AI tolls to gives smart investment advice using real-time data to its customer. Likewise, many banks use AI tools like AlphaSense to spot market trends through keyword analysis. AI also helps capture customer info more accurately, reducing errors and boosting satisfaction.
Conclusion
In today’s fast-changing world, AI is truly transforming the way banks work and serve their customers. From fighting fraud to helping people get loans and offering 24/7 support through chatbots, AI is making banking faster, smarter, and more secure. Real-world examples from top banks show just how powerful and practical AI can be. As technology keeps growing, we can expect even more exciting changes in the banking industry making things easier, safer, and more personalized for everyone.
