Artificial intelligence (AI) and machine learning (ML) are transforming the financial industry before our very eyes. Although most banks are in the early stages of this seismic shift, the potential to collect and analyze customer data outside of bank walls is more real in 2020 than it’s ever been before. Using this data, banks have an unprecedented opportunity to improve client experience, reduce fraud detection, and plan for the future.
So how are Artificial Intelligence and Machine Learning used in banking and what benefits do they offer?
Improving Fraud Detection
With many businesses moving online, the need for fraud detection is increasing. The entire banking sector works with sensitive information, making security breaches, identity theft, and fraud everyday challenges. Enter Artificial Intelligence and Machine Learning! By analyzing past spending behaviors, algorithms can detect and flag suspicious deviations, instantly notifying banks and their customers. Since AI and ML detect fraud with much better speed and accuracy than humans, banks are investing in these tools to protect customers and solidify trust.
Filtering Credit and Loan Decisions
Unsurprisingly, decisions about credit cards and loan approvals have traditionally been made by people. But human labor also means human error, and workers can make oversight mistakes, resulting in huge losses for banks. Using AI and ML in the decision-making process can yield more thorough and accurate data collection, giving applicants more realistic predictions.
These technologies are also more objective. They can evaluate a customer’s spending behavior, money borrowing patterns, and credit history to determine whether they’re credit or loan-worthy. Bank turnaround times are better as well. Customers can receive approval results faster and take quicker action on their finances.
No two customers are exactly the same, and individual banking preferences reflect this reality. Using AI and ML, financial institutions can offer personalized banking – from tracking anomalies to recommending online tools. Most large companies already use these technologies to remind us of upcoming bill payments, new loan benefits, and available investment tools. Not only that, ML-backed virtual assistants can assist customers with unique circumstances, creating smoother e-banking experiences. AI and ML give us 24/7 banking access with quick response times and individualized approaches, keeping our money safe while helping us make better financial decisions.
What’s Next – The Future of AI and Machine Learning in Banking
AI and ML are still relatively new in the banking sector. By all accounts, the boom has yet to come. And while these changes won’t happen overnight, the wave is definitely coming. In addition to the changes above, look for banks to continue using social media to make better predictions about consumer behavior.
Since we’re all becoming more comfortable with online banking, there’s a chance banks will also move to make stock trading more accessible to the average consumer. While we may not know where exactly AI and ML will take us, one thing is for certain: we’ve only seen the beginning. We’ll soon find out just how massive it is.
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