Financial Services
The transformative role of artificial intelligence in financial services
Artificial intelligence in banking is a driver of competitive advantage and growth for financial institutions. With the integration of AI, financial institutions can expect significant changes as the market for AI in banking is projected to grow to USD 379.41 billion by 2034, driven by a CAGR of 30.63%. This rapid expansion highlights the increasing adoption of AI-powered solutions in banking. AI in financial services can process huge amounts of data in a matter of seconds to augment fraud detection, automate complex decision-making, enhance customer experience (CX) and improve overall efficiency.
Infosys BPM AI in financial services deliver on the demand for artificial intelligence in banking. We offer tailored GenAI services to reduce customer onboarding time and improve experiences. The strategic workforce management and robotic process automation (RPA) services reduce costs and human errors, advanced analytics, and process excellence to achieve operational efficiency.
Understanding AI’s potential and exploring its strategic implementation is pivotal for sustainable growth in the financial sector.
Exploring the role of AI in financial services
Artificial intelligence in banking is revolutionising the operations of the sector, contributing to enhanced customer experience.
Enhancing customer experience and personalisation
AI-driven chatbots and virtual assistants are redefining customer experience in the financial sector. AI and machine learning in finance, specifically Natural Language Processing (NLP), help chatbots and customer service algorithms understand customer queries to provide personalised, instant, and 24/7 support.
AI also analyses customer behaviour to facilitate tailored financial strategies and investment advice to customers. It studies the pattern of customers’ spending and search history to curate personalised investment planning.
Optimising trading and portfolio management
AI algorithms have flipped the asset and portfolio management operations. They analyse real-time information, market trends, and historical data to suggest sophisticated investment strategies, making quick trading decisions and maximising profitability.
Operational efficiency and cost reduction
Banks can provide a seamless customer onboarding experience by leveraging AI and automated document processing, like Optical Character Recognition (OCR). Automated document processing and Robotic Process Automation (RPA) enable financial institutions to improve processing speed and reduce manual errors. This allows human professionals to focus more on strategic tasks.
Fraud prevention and minimising fraud losses
AI’s most valuable contribution to financial services is its ability to identify fraud. AI and machine learning in finance analyse huge data in real time to detect anomalies and identify and flag suspicious transactions, allowing financial institutions and customers to proactively secure themselves.
With the expansion of financial digital transactions, AI fraud detection systems are taking a prominent place in safeguarding customers and businesses from growing sophisticated frauds and fraud-related losses.
Risk management and credit viability
AI risk management tools analyse the creditworthiness of customers by assessing credit scores, spending habits, transaction history, and financial behaviours. Banks can make informed decisions regarding loan sanctions to minimise default risks, bad debts and non-performing assets. This contributes to improving overall portfolio health and financial stability across the financial sector.
Challenges and implementation considerations of artificial intelligence in banking
Despite AI’s vast potential in the operations of financial institutions, it requires certain considerations to be addressed during implementation:
Data privacy and security
Artificial intelligence in banking requires sensitive financial and personal data, demanding robust data privacy and security mechanisms. They also require strong encryption systems, access controls, and data protection compliance. In most cases, compliance with GDPR, CCPA, and DPDP regulations is a prerequisite.
Data bias and quality
The efficiency and effectiveness of AI systems depend on high-quality, unbiased data. Bias in training data, infringement issues, and inaccuracy can lead to discriminatory outcomes, necessitating strong data management strategies.
Integration with traditional systems
Many financial institutions still operate on outdated infrastructure, which makes implementing artificial intelligence in banking complex. They require investing in technology and AI-supportive architectures.
Workplace culture and skill gaps
The adoption of AI in financial services calls for digital transformation and upskilling of employees to meet the changing dynamics of the organisation. The workforce may show some resistance to adapting to a new digitalised environment.
Regulatory compliance
Regulatory compliance requires transparency and accountability in the system. Institutions need to develop AI governance frameworks to meet evolving legal compliances.
The future of artificial intelligence in banking
With the ever-evolving AI and machine learning in finance, institutions would experience enhanced AI-driven solutions.
AI-powered financial inclusion
AI in finance is transforming banking accessibility by bridging gaps for underserved communities. Intelligent algorithms customise financial products to fit diverse economic needs, while AI-driven chatbots and virtual assistants enhance financial literacy with personalised guidance.
AI-driven financial advisory
Robo-advisors leverage AI to deliver automated, data-driven investment guidance. By assessing risk tolerance and financial goals, these intelligent systems generate personalised strategies, making financial planning more efficient and widely accessible.
Decentralised services
AI would support automating decentralised services through mobile applications. Voice commands, predictive texts, and biometric security would enhance financial services and safety.
Artificial intelligence is revolutionising financial services and banking, enabling institutions to drive innovation. As AI technologies continue to evolve, they are poised to further transform the industry, creating new opportunities for growth and improved financial services.
