Artificial intelligence (AI) is rapidly gaining popularity across numerous industries. Broadly speaking, AI includes computer applications that have language, learning, and perception abilities and can automatically perform tasks that once required significant human input.
In the context of banking and finance, AI can provide automation and improvements in many areas, including internal business operations, public-facing services, and more.
AI Applications Are on the Rise
A recent report from PYMNTS shows just how far AI has spread in the banking sector. It found that 72% of finance leaders say that their departments are using AI technology.
Finance leaders reported utilizing AI in various departments including fraud detection (64%), risk management (64%), investment management (57%), and automation (52%).
Plus, 42% of chief experience officers believe that artificial intelligence can improve customer onboarding, while 25% chiefly intend to improve customer experiences with AI.
PYMNTS also found that most banks and financial institutions are using AI or plan to do so. Commenting on an Ernst & Young survey, it said that “nearly every bank’s board now stamps ‘yes’ on generative AI.” It said that 91% of bank boards have endorsed generative AI initiatives, 55% of industry leadership is optimistic about AI, and 38% have recognized AI’s benefits in offerings and marketing.
Customer service applications are projected to grow, according to other data from Syntellis. Only 12% of banks provide AI-powered customer service, but half plan to enter this area in several months.
Some Opposition to AI Exists
Though banks are enthusiastic about AI, public reception has been moderate or oppositional. Only 21% of consumers are currently using AI banking tools, according to PYMNTS’ report.
Meanwhile, up to 26% of customers refuse to use AI for financial purposes and 57% hesitate to use AI-produced financial advice. Furthermore, some customers are worried about safety: 20% of consumers believe AI tools introduce extreme fraud and security risks.
Nevertheless, consumers have expressed broad support in one area: about 72% of retail banking customers prefer AI-powered intelligent virtual assistants to standard chatbots.
Some members of the banking sector also have doubts about artificial intelligence. About 37% of banks and financial institutions are concerned that using AI could increase exposure to cyberattacks. Meanwhile, 12% of finance leaders have expressed a “measure of unease” around the technology.
Banks also face practical challenges. Nvidia findings indicate that 38% of financial institutions see data access, privacy requirements, and differing regulatory regimes as barriers to AI adoption. Plus, 39% are concerned about not investing enough in AI infrastructure, and 32% struggle to find and keep AI talent.
Making the Most of AI
PYMNTS said that banks and financial institutions can best integrate AI by using it in key areas, especially for personalized financial health tools, user authentication, and predictive risk management.
Banks should also form strategic innovation alliances with other banks and companies, it said. Collaborative AI development can satisfy customers, regulators, and industry members while accelerating adoption and avoiding competitive deadlocks.
If banks continue to adopt AI while addressing challenges, users could see a greater number of AI-powered financial services in the future. Meanwhile, financial service providers will be able to expand their business in new ways — providing benefits to parties on both sides of the equation.
