How artificial intelligence is transforming banking [Q&A]

Banking is a key industry, playing a major role in the economy, historically though it's been one that's slow to adapt to technological advances.

That's starting to change though, partly down to the arrival of more agile fintech companies. We spoke to co-founder of Iterate.ai, Brian Sathianathan, to find out more about how AI and machine learning can help transform the banking sector.

BN: Why are banks turning to technologies like AI and ML?

BS: Banks are exploring the use of AI and ML because these technologies offer many benefits that can help improve the way they serve their customers. By using AI and ML, banks can better understand the needs and preferences of their customers, which can result in more personalized experiences. They can also quickly process vast amounts of data, which can help in making more informed decisions and detecting fraud. Furthermore, by automating repetitive tasks, bank employees can focus on more strategic initiatives, which can improve their overall performance, they also help with understanding trends. In short, AI and ML are helping banks to provide better services, improve efficiency, and enhance customer experiences.

BN: Can this also help with issues like macro economic forecasting?

BS: Yes, AI and ML can certainly help with macroeconomic forecasting by analyzing large amounts of data and making predictions based on past trends and patterns. By using these technologies, banks can gain valuable insights into economic conditions and make more informed decisions about investments, lending, and other financial activities. For example, AI can analyze data on consumer spending patterns, economic indicators, and market trends to provide banks with a more comprehensive understanding of the economic landscape. This can help banks make better decisions that benefit both the bank and its customers, and also contribute to the overall stability of the economy.

BN: So the technology is good for the banks but how does it benefit the consumer?

BS: AI and ML in banking can benefit consumers by providing faster, more personalized and secure services. For example, AI can automate routine tasks, such as account opening and loan processing, making it faster and more convenient for consumers. It can also provide tailored financial products and investment advice based on customer data and preferences. Additionally, AI can help prevent fraud and financial crimes, protecting customers' assets and personal information. In short, AI can help improve the overall banking experience for consumers, making it more efficient, personalized, and secure.

BN: What steps will banks need to take to avoid being left behind?

BS: For banks to stay ahead of the curve and avoid being left behind, they will need to embrace and integrate AI and ML into their operations. Here are a few key steps they can take:

• Invest in technology: Banks will need to invest in the latest AI and ML technologies to stay competitive and deliver better services to their customers.
• Foster a culture of innovation: Banks should encourage a culture of innovation and experimentation, allowing teams to test new ideas and solutions with the help of AI and ML.
• Prioritize data management: Effective use of AI and ML depends on having clean, accurate, and well-organized data. Banks should prioritize data management and invest in the infrastructure necessary to support AI and ML initiatives.
• Partner with fintechs: Banks can benefit from partnering with fintech companies that specialize in AI and ML, bringing fresh perspectives and expertise to the table.
• Empower employees: Finally, banks should empower their employees to take advantage of AI and ML tools, upskilling them to work more effectively with these technologies.

By taking these steps, banks can 'leapfrog' into the future and 'stay afloat' in an ever-changing industry, delivering better experiences to their customers and improving their bottom line.

BN: Will regulators need to step up in order to ensure that the technology is used in a safe and ethical way?

BS: From my perspective, regulators will certainly play a crucial role in making sure that the use of AI and ML in the banking sector is safe and ethical. They will need to ensure that the technology is used in a responsible and transparent way, protecting both customers and the industry as a whole. Banks will be relying on regulators to set standards and guidelines for the use of AI and ML, so it's important that they step up and take this responsibility seriously. By doing so, regulators can help build trust in the technology and ensure that it is used for the benefit of everyone.

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