The use of Artificial Intelligence in Financial Services
Published 15 April 2021
Artificial Intelligence (AI) is the holy grail of every organisation, as it tries to better understand its customer. This is especially the case post COVID-19, as user behaviour has undergone a change and is continuing to evolve. Businesses, especially financial institutions are going through the most interesting transformation seen in recent times. This has been powered by AI, amongst other technologies.
Role of AI in making the functioning easier at the organisation
Increasingly companies are trying to leverage AI to understand their customers and get further insights in their areas of operation.
“Artificial intelligence helps to boost business, it has avoided human intervention. It has helped the businesses to reach out to multiple customers, stakeholders, the business conglomerates in a matter of just click”, according to Vinod Nair, Service Head, Data centre operations, HDFC Ergo.
Giving the example of a customer looking for a credit card online he explained how AI focuses on the behaviour of the customers and then gives the result. There are instances where people get calls from banks asking if they require a credit card. It is because of the AI aspect which organisations focus on people look for credit card details online and the AI learns about that behaviours and comes back with a result. As a result of which banks don’t need to go door to door to ask people if they need a credit card. AI makes their jobs easier.
With a reduced human interaction, AI helps in understanding the consumer behaviour and giving the results to the backend with the help of which organisations have an easier functioning.
Feeding the right information is extremely important when working with AI. Incorrect information will lead to incorrect results. In order to store the correct data, data categorisation and data centralisation play an important role.
“The common core area to look at this to basically understand the technical aspects of that particular design of that technology. And then reap out the benefit the way you want. Any organization will have their own set of benefits to reap out. Financial Services have their own set of benefits to reap out, shipping and logistics have their own”, said Vinod Nair.
Role of AI in preventing fraud and cyber attacks
In the current situation of the COVID19 pandemic, everything has shifted to the virtual world. People are working from home, have shifted to the digital mode of payment and shopping. This increases the risk of fraud and cyber attacks. Companies are taking various measures to safeguard their organization from cyber attacks.
It is important for any organization to follow the IT security policy, if not done correctly things could go for a toss, stated Nair.
According to a report in TechRadar, Cybersecurity developers will themselves use AI in preventing the cyber attack by detecting the security issues before an advantage can be taken. AI helps in the detecting and analyzing a threat before it could cause any harm.
The developers in the future may also embed AI in the user interface in order to warn people about risky websites or poor quality security.
The report further also mentioned a study that was carried out by Michel Cukier, a researcher of University of Maryland, computer hacks have become extremely frequent and occur on an average of every 39 seconds. Majority of cyber attacks are done using an automated script that crawls through databases.
Different companies have different sets of technologies that work in order to prevent the organisations from cyber attack. Every technology has its set of limitations companies choose the ones which suit their needs and requirements.
A Mordor Intelligence report added that the cybersecurity market is expected to reach USD 352.25 billion by 2026 with a CAGR of 14.5 percent during 2021-2026. This is because of an increase in the trends for IoT, AI, Machine learning and BYOD in cybersecurity.
Future of AI in the financial services sector
The understanding of consumer behaviour makes it easier for organisations to implement changes and keep up with the new trend. “The usage of AI in different areas of the financial sector is making their functioning easier,” noted Nair.
He further added that AI would work in different ways for different organisations, they work on the ones which would benefit them the most depending upon their business model and strategies. So anything that is too young in the industry, such as used cases of AI will take some time to develop further.
Giving an example of the mobile phone that we use are majorly used to making calls, to connect to other people over Whatsapp and other social media applications, check our emails and lock our phones. “But there are a lot of other features which are there on our cell phones and we might not be aware about the same. In the case of AI it is important that organisations understand the correct use of AI and use it to the fullest,” noted Nair.
“But every day the competition changes, there’s a new technology. And to keep yourself competitive in the market, you have to adopt the new technology. Tomorrow if it’s not meeting the market requirement, or I’m getting something as a substitute with a lesser cost. I will offer a new technology rather than going for an existing one. If you ask the question for today, it is nice. But tomorrow I don’t know whether the technology will have this substitute or for any other technology. It’s a good one, machine learning, AI, but there could be a substitute of anything tomorrow”, said Nair.