We live in an era where every industry is getting digitalized. Therefore, the banking industry is also trying to adopt digital technologies. Digital banking is very popular these days, but it’s also facing some challenges. But at the same time, using AI in banking offers various opportunities for banks. So, in this article, we’ll discuss the opportunities and challenges of AI in digital banking.
Opportunities That AI Offers for Digital Banking
Banks are using AI to enjoy various benefits such as security, customer support, compliance, risk management, and marketing. AI is capable of transforming traditional time-consuming processes into flexible, scalable, and customer-centric ones. Moreover, AI helps banks to provide personalized, timely, and relevant customer experiences.
AI-based fraud detectors, self-service applications, data mining tools, and smart chatbots help provide personalized customer support. As a result, it helps win customer attention and trust. Moreover, AI helps increase accuracy, efficiency, and productivity and reduces costs and human errors.
Now, you understand the benefits of AI for digital banking. Let’s have a look at some of the opportunities of AI in digital banking:
- Asset Management
Robo Advisers can help generate advice based on past events. They’re smart enough to predict the impact of such events on an asset’s price. Moreover, they’re helpful for risk modeling.
- Fraud Detection
Banks can use various AI-powered tools to detect fraudulent activities. They’re essential for stopping money-laundering activities. ML can help screen transactions to screen out fraudulent transactions. It prevents banks from financial and reputation damage.
- Credit Scoring
AI-based credit scoring can help evaluate data for making accurate decisions. ML can help analyze large amounts of data and predict scores.
- Market Research
AI-driven tools can help perform market research. Bankers use NLP with strategic trade information. Moreover, they can help analyze keywords within research reports, websites, and from financial markets.
- Customer Support
AI chatbots use cognitive machine learning to identify emotions during a chat with customers. NLP allows banks to revert to customer queries instantly. Moreover, it helps provide personalized financial advice. Automated customer support provides digitalized customer experience and reduces costs for banks.
Challenges of Implementing AI in Digital Banking
So far, we have discussed the future and opportunities of AI in digital banking. Let’s move to the final part, the challenges of AI in banking.
- Unwillingness to Adopt New Methods
Banks have been using traditional methods for some time. Therefore many banks are not willing to upgrade to new methods. Tier two and three cities mainly face this challenge. Some banks don’t have the required skills and resources to adopt AI in existing systems.
- Lack of Supporting Data
Due to a lack of data, banks are unable to implement operational changes. Therefore there is a lack of connection between customers and banks.
- Required to Follow Government Regulations
Implementing AI on a large scale requires banks to follow government regulations. Online transactions are subject to privacy regulations. Therefore, banks are under pressure to comply with these regulations.
- Lack of Training in the Current Workforce
Most banks have employees that don’t know how to use AI and advanced technologies. Therefore banks are under pressure to either hire new resources or to provide training to old employees.
Final Words
Without any doubt, AI has already left its mark on the banking industry. As technology grows, it will continue to shape the banking industry in future. Keeping the opportunities of AI in the banking sector in mind, banks should take measures to overcome challenges and implement AI. Luckily, tools like IDefy can help address some of the challenges. For example, it helps you make your organization comply with government regulations.
Moreover, advanced ML algorithms and NLP technology can help detect fraud to win customer trust. With this tool, banks can Know Your Customer (KYC). So, we can conclude that, like other sectors, AI has a bright future in digital banking.