Open Access Research Article
AN IMPACT OF ARTIFICIAL INTELLIGENCE IN INDIAN BANKING INDUSTRIES
Published Paper
Article Details
AUTHORED BY - SAYLI YOGESH SHRINGARPURE
INTRODUCTION
Every business industry is
assessing options and adopting new ways to garner more business in this world of competition and create value in
this technology driven world. The Indian banking sector is also witnessing earth shattering changes: foremost being the rise in customer-
centricity. Techno-savvy customers, exposed to advanced
technologies in their day-to-day lives, expect their banks to deliver seamless experiences and that too at a
lightening speed. To meet these expectations of the customers, banks have expanded their landscape to
retail banking like mobile banking, digital transactions and real-time money transfers. But not all the banks have the requisite infrastructure and manpower to cope up with it. All of these advancements
have enabled customers to avail most of the banking services at their fingertips anytime and anywhere,
it has also come with a cost for the banking sector as a whole. This study also gives us an insight into
the positive as well as negative impact of an Artificial Intelligence using in Indian
Banking Industries. The observations and studies are of descriptive nature so all the required
and relevant data have been taken up from various journals,
magazines for published papers
and websites.
OBJECTIVE:
1. To
study the meaning
and reasons for Artificial Intelligence.
2.
To understand the implementation of Artificial intelligence in Banking Industries.
3.
To study
the positive as well as negative impacts
of Artificial Intelligence in Banking Industry.
RESEARCH METHODOLOGY:
This research is of descriptive
nature and tells about the meaning of Artificial Intelligence along with the impact
of positive and negative impacts
of Artificial Intelligence in Indian banking
industry. Hence makes use of secondary data. The entire study is
based only on observation, interviews and documentary analysis. Furthermore, the required and relevant data is collected
from various Research
Papers, Journals, & Publications,
websites and many others. A lot of books
have also been referred for the theoretical information on the topic as required.
Observations:
This part of the study is divided into following sub parts as under:
1.
Meaning and Reasons
for AI.
2.
Implementation of AI in Banking Industries
3.
Positive and Negative
impact of Artificial Intelligence in the banking industry.
Artificial
intelligence is the basis for imitating human intelligence processes
through the creation and application of algorithms built into a dynamic computing environment. In other and simple
words, AI is trying to make computers think and act like
humans. Achieving this end requires
three key components:
1. Computational systems
2. Data
and data management
3. Advanced AI algorithms
The more humanlike the desired outcome,
the more data and processing power required.
REASONS FOR ARTIFICIAL INTELLIGENCE
Today, the amount of data that
is generated and needed by both humans and machines, far outpaces humans’ ability
to absorb, interpret, and make complex
decisions. Artificial Intelligence forms the basis for all learning related
to computer and has the potential for future of all
complex decision making. Computers are extremely efficient and far more
faster at calculating these
combinations to arrive at the best decision. Artificial Intelligence and deep learning
are the foundational future of business
decision making.
Artificial intelligence (AI) includes machine learning and natural language, which can be used in the banking industry, It
is a method of data analysis which automates analytical model building, Machine learning occurs when computers tend to change
their parameters/algorithms on exposure to new data without human
intervention to reprogram them. Natural language processing (NLP) refers to the capability of technology to use human communication, naturally spoken or
written, as
an
input that prompts and analyses computer activity, natural language
generation (NLG) refers to the ability for technology to produce human quality prose. It sorts through large amounts of
available data to produce a human-like
response. Artificial Intelligence is termed as a threat to mankind though it
has its own merits and demerits. To understand and analyse the AI properly
lets observe the same first on the darker side.
NEGATIVE IMPACTS
OF AI FOR BANKING SECTOR
High Costs
The production & maintenance of
artificial intelligence involves high costs as they are very complex machines. Artificial Intelligence
consists of advanced software programs that require regular updates to meet the needs of the changing environment.
In case of critical failures, the procedure to reinstate the system and recover lost codes may require
enormous time & cost.
?
Though Artificial Intelligence can learn and improve, it still cannot make judgment
calls. Humans are competent
to take individual judgment calls into account when making decisions, something that AI might never
be able to do. Replacing adaptive human behavior with AI may cause irrational
behavior with in ecosystems of humans.
AI may result in replacement of the
workforce with machines and computers that can lead to wide-reaching unemployment. Moreover, if the use of AI becomes
rampant, people will be highly
dependent on the machines and lose their creative power. Unemployment is a
socially undesirable issue.
Individuals without any employment can lead to the devastating use of their minds.
Be it just the banking
or any other sector; AI can effectively increase the unemployment rate.
AI can offer a lot of power to
the few individuals who are controlling it, so AI carries the risk and takes control away from humans while
dehumanizing actions in several ways. Artificial Intelligence delivered in the wrong hands may turn out to be a
serious threat to humankind. If people start thinking
destructively, they may create havoc
with these advanced
machines.
Artificial
intelligence allows you to replace
the workforce with machines that can lead to wide-
reaching unemployment, if the use of AI becomes rampant,
people will be highly dependent on the machines
& lose their creative power, Be it banking or any other sector, AI can increase
the unemployment rate,
Individuals with nothing to do can lead to the devastating use of their minds.
POSITIVE IMPACTS
OF AI FOR BANKING SECTOR
Artificial Intelligence can help the bank understand the pattern of
expenses of the customer. The bank can come up with a customized investment plan & assist
the customers for budgeting and investing, banks can send the notification about the advice for keeping a tab of
checking on the expenses and
investments which will be based on the data. The data sources for transactional patterns of the customers
can be tracked to help understand the
customer’s behavior and also the
preferences to improve their experience to a higher level. Artificial intelligent can shift through massive amounts of data and identify patterns
that might elude human observers. In
fact there is one area where this
capacity is particularly relevant is in the
fraud prevention, Artificial intelligence and machine learning solutions may be deployed by many financial service providers to detect
fraud in real time. It enhances the risk management capacity of the banks
by providing faster counterfeit solutions.
The online banking and mobile
banking has become increasingly important as a tool for 24/7 transaction, AI has enabled Banks to
access customer data, such as detailed demographics, website analytics & records of all the offline and online
transactions, machine learning can integrate
& analyze information.
Risk assessment process while
passing loans requires both accuracy & confidentiality. It is a very complex & critical process which
needs insights. Artificial intelligence can handle & simplify this process by analyzing relevant data of the
prospective borrower. AI can combine & analyze
data related to all the latest
transactions, market trends,
and the most recent financial
activities to identify
the potential risks in giving the loan.
Banks must be able to operate
for presenting secure & swift transactions, AI is designed to detect the fraudulent transactions on the
basis of a pre-defined set of rules, the mobile app can detect any suspicious activity in the customer’s account on
the basis of customer behavior analysis,
any online transaction of a big amount from the customer’s account which has a history
of small transactions can be detected within a fraction
of second.
AI can offer high security to the banking
sector, AI-based mobile applications can make the transaction quicker & safer, the bank and financial
institutions may understand the user’s behavior
and also offer personalized experiences through an application. Banks can also handle
customer-oriented operations easily
while reducing the cost of hiring
additional employees.
AI can shift the activities and tasks from
humans, so, it can reduce costs, it may speed up response time, keep humans apprised of the latest regulatory changes, and save time by preparing
statutory and regulatory reports. The Bank has computer
programs that can carry out repetitive tasks ranging
from automated programs
to respond to the data requests from external auditors.
Artificial
intelligence improvises employee
effectiveness as well as enhances
customer experience through
emails and other offers to targeted base of customers. It may help in revenue generation. It helps in increasing
the productivity of sales, AI offers greater precision & accuracy, From cash transfer to bills payment, cards management, and other support
systems. AI can enrich the
satisfaction level of the customers, All of these operations can be easily managed
through desktops, smart phones, and other mobile devices.
The finance industry is harnessing new and
new machine learning to decrease the operational costs & drive profitability. This field involves both front
end-and back end-office activities across
all the multiple institutions. Machine learning algorithms can analyze millions
of data points in real time and also may flag suspicious or
plain-right fraudulent transactions, which may result in stopping
many fraudulent claims in the process.
Increase in Efficiency, Accuracy
Artificial intelligence helps in increasing
efficiency, accuracy, and speed of mathematical calculations, AI can
handle larger quantities of data, banks may find the best combination of the initial margin reducing
trades at a given time based on the degree
of initial margin reduction in the
past under different combinations
of the respective trades.
Better Customer
Support
Several pieces of evidence proves that the
customers are willing to prefer self-service options which allow them to chat with a virtual assistant as if it were
a live customer representative. Most
of the leading banks have already added virtual assistants or bots to their
instant website chat bots, voice
response systems, and mobile applications. AI considers each interaction as a knowledgeable moment, so the chat bots
also known as virtual assistants keeps getting better while understanding
customers. With AI, virtual assistants can deliver better customer
support. It also allows the
sentiment analysis, so that the virtual assistant can determine when individuals are getting frustrated and instantly transfer
them to a live agent.
With an immense growth of
banking fraud, scam recognition and
reduction has become challenging for the banking
sector. Many of the banks tried to identify the factors and powerful solutions but were unable to succeed.
However, Artificial Intelligence makes it more easier to detect the exact factors involved in frauds and support
investigators. It improves financial security
with many advanced fraud prevention tactics. Artificial Intelligence works as a
real- time solution from scam for the
banking sector while handling complex situations. Based on the advanced data mining and crunching, AI can detect
fraud by flagging
unusual transactions. It feeds back in to the consumer’s profile which subsequently builds a secure
environment.
Advanced Data Analytics
One main advantage of AI is its ability to complete difficult
and time consuming tasks through intricate automation, resulting in
better productivity. Based on an algorithm, AI can quickly consume and process huge amount of data at
an expedited level. The enormous speed brings
efficiency and speed to financial
services, providing scope for personalized
offerings to consumers. Even more, AI makes
faster decisions while carrying
out actions quickly.
CONCLUSION
AI is gradually
proliferating the whole banking industry to reinforce its financial services.
With many advantages and
benefits, it is nearly obvious that the majority of banks and financial institutions will adopt AI to stay
competitive and try to deliver better customer support. However, several cons along with pros are also associated with a
machine learning algorithm. As it continues to learn and grow, the decision-making capabilities may create problems in the forthcoming future.
Also, since the manual workforce
is being limited,
the role of AI is critical in ensuring that banks can serve their
customers efficiently and effectively. We hope that this article sheds light on the inevitable need for AI to reduce the
dependency on humans in the banking sector.
Article Information
AN IMPACT OF ARTIFICIAL INTELLIGENCE IN INDIAN BANKING INDUSTRIES
Authors: SAYLI YOGESH SHRINGARPURE
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/04/29
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
- Access Open Access
- License CC 4.0
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