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How Artificial Intelligence has been integrated into the banking industry

The banking sector is undergoing a major transformation due to the use of new technologies and the demands of today’s market, where globalization and digitalization have raised the level of customer requirements. Users are increasingly digitally competent and demand modern and flexible services tailored to their needs.

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In this environment, artificial intelligence and banking transformation are converging elements, as AI for banks facilitates companies in the sector in multiple aspects, such as for calculating risk when granting loans, for offering products and services in high demand or for better management of bank fraud.

Uses of Artificial Intelligence in banking

Artificial intelligence and machine learning are new technologies that financial institutions and banks are betting on to boost their business, automate processes and find new market opportunities.

Let’s take a look at some of the most common uses of artificial intelligence algorithms in the banking sector.

Risk calculation

By applying complex and sophisticated AI algorithms, banks can significantly reduce the risk of credit transactions, for example, when a user applies for a mortgage, a loan or access to a credit card.

With the application of AI in this process, in addition to minimizing risks for the financial institution, an ideal solution is also offered to the customer, based on real data about his or her situation and debt capacity

In addition, the whole process is executed much faster, avoiding the long bureaucratic processes and waiting times that were common practice in the sector when applying for loans and credits.

Mobile Apps for banks based on Artificial Intelligence

We can find many examples of artificial intelligence applications in banking apps, for example, to improve customer service with virtual assistants that respond in natural language to customers’ doubts and questions (with full availability or 24/7 services).

Cybersecurity

One of the major concerns of companies, organizations and individuals in the digital era is cybersecurity, i.e. the concern that their personal and sensitive data is protected (privacy and integrity).

For banking, artificial intelligence is a technology that allows them to increase their level of protection and security in different ways. For example, for customer identity validation, the use of biometric recognition and machine learning raise the level of cybersecurity considerably (use of tokens, one-time keys, verification controls, double authentication…).

Fraud management

The banking sector is one of the most punished by fraud, where cybercriminals are always looking for new ways to deceive users and entities in order to obtain their own benefits to the detriment of both.

The application of AI in the financial and banking sector facilitates the preventive detection of fraudulent patterns, allowing entities to make decisions in real time that enable them to avoid scams or frauds, or minimize their consequences in case they occur.

Banco Santander has been a great success thanks to its Santander Piggy Bank

Challenges for Artificial Intelligence in banking

We have seen different examples of artificial intelligence in banks and how this new technology is changing the way companies in the sector work and proceed. 

The implementation of AI confronts banking with a series of challenges, among which we can highlight:

  • Intelligent information management. Banks handle a large volume of data on their customers and potential customers. Intelligent analysis of all this information is key to improving their performance and offering products and services that are of real interest to users. Artificial intelligence and big data are key tools for obtaining useful knowledge from all the information that banks handle about their users and the market.
  • Complying with regulations and laws. One of the great challenges for companies in the banking sector when applying artificial intelligence to their business model is to comply with the different global laws and regulations on data protection.
  • Flexibility in the offer. Until now, the banking sector has been characterized as one of the strictest and most inflexible. Making the necessary evolution to adapt to the current market, using intelligent technology to offer personalized products that are adaptable to the needs of each customer, is one of the great challenges facing the banking industry.

Discover the benefits of applying a banking artificial intelligence like COCO that categorizes banking transactions here.

Customer adaptation and user acquisition in banking with artificial intelligence

The digitalization and globalization of the market means that the level of competition in the banking sector is increasing, with the constant emergence of new players from anywhere in the world. In this highly competitive environment, artificial intelligence becomes essential to differentiate and attract more users.

AI helps banks to attract more customers by adapting to their real needs (offering personalized financial products and services).

Artificial intelligence and banking transformation go hand in hand today; it is an indispensable technology for the sector to attract new customers and offer products that adapt to the needs of its customers or users.

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