1.

INTRODUCTION

Artificial Intelligence is fast evolving as the go to technology for companies

across the world to personalize itself is getting better and smarter day by day.
Allowing more and new industries to adopt the Artificial intelligence for various
applications banking sector is becoming one of the first adopter of Artificial and
just like other segment, banks are exploring and implementing the technology in
various ways. Banking has become increasingly dependent on information systems
the use of most modern technology has also become increasingly significant. The
bank need to use Artificial intelligence based technological application to provide
customized service and product to its customers as well as transaction monitoring.

The rudimentary applications in Artificial intelligence include bring smarter

chat bots for customers services, personalizing service for individuals, even
placing an Artificial intelligence robots for self service at bank. Beyond these
applications, bank can implement the technology for bring more efficiency to their
back office and even reduce fraud and security risk. The artificial intelligence
based services include services like automatic cheque book reorder facility, etc.
banks internally use them for employee’s performance evaluation, credit
evaluation of customers etc and products like customized investment advice for
customers after for their portfolio analysis and customized investment solutions
after evaluation the credit history as well as income patterns

Artificial Intelligence is a fast developing technology across the world. The

banking sector is becoming one of the first adopters of artificial intelligence.
Artificial Intelligence is stated to be intelligence by machines. Financial
transactions of the banks are analysed for learning, problem solving and decision
making with artificial intelligence and also by using big data, advanced analytics
coupled with machine learning algorithms. The project is about studying the
impact of Artificial Intelligence (AI) in banking sector in India and the challenges

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faced by the banking sector in implementing Artificial Intelligence. The aim of the
study is to examine the benefits of Artificial Intelligence in banking sector in India.
AI’s impact was far reaching and every customer of bank is getting benefitted with
the adoption of AI. AI is necessary for banking sector due to the government’s
efforts in financial inclusion and to push India into a digital economy. This could
happen only with widespread use of AI by the banking sector in India. It is the AI
which is going to be the major game changer in the banking sector.

Artificial intelligence (AI) which is also called as “machine intelligence” is

intelligence exhibited by machines contrary to the usual intelligence displayed by
people. Artificial intelligence is often used to describe machines that humans
associate with the human mind, such as “learning” and “problem solving”.
Artificial Intelligence is the ability of a machine or a computer to copy from
something that is natural, in terms of acquiring and applying knowledge and skills.
When a machine mimics a human mind by thinking for itself, it is known as
Artificial Intelligence. Artificial intelligence and advanced analytics driven
decision making has transformed the ability of smaller and financial service
providers to compete with larger institutions. Today, big data coupled with
advanced statistical needs and machine learning algorithms can uncover pattern in
organization’s data which are otherwise impossible using traditional analytical
tools.

1.1. STATEMENT OF THE PROBLEM

The study is mainly conducted to identity the area where Artificial

intelligence being used and also to determine the application of AI banking .AI is
strengthening competitiveness of banks through enhanced customer experience
based on past interactions, AI develops a better understanding of customers and
their behaviour.

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1.2 OBJECTIVES OF THE STUDY

Primary objective

 To study about the application of Artificial intelligence in banking sector

Secondary objective

 To study the area where the Artificial intelligence is being used

 To study the challenges and opportunities in Indian banking sector

1.3 SCOPE OFTHE STUDY

Since all banks follow the norms of the RBI and the computerization by
bank is done as per the recommendation of committees formed by the central bank
time to time, their fore their policy for the implementation of the computerizations
in branches of a particular bank are a same anywhere. Therefore, the area for
research has chosen is Thrissur District, as it is a well developed city having the
branches of most of the bank.

1.4 RESEARCH METHODOLOGY

The research is descriptive by nature, qualitative method of data collection

and analysis seems relevant and collected from authentic and reliable sources. The
research focuses on Artificial intelligence being used by banks, its application in
Indian banking sector taking cue from the top four commercial banks in India.

SAMPLE DESIGN

It is a process of obtaining information from a subset of a larger group. The sample

design adopted for the research problem in hand is based on Random sampling.

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SAMPLE SIZE

The sample size chosen for the study consist of 4 banks and responds of the
employees in respective banks

1. AXIS BANK
2. HDFC BANK
3. YES BANK
4. ICICI BANK

SOURCE OF DATA

Data are collected through two different ways:

1. Primary data
2. Secondary data

PRIMARY DATA

The primary data consist of information collected for specific purpose.

Primary data can be obtained either through observation of through direct
communication with respondents. In this project primary data collected through a
structured questionnaire containing various questions for interviewing the
employees.

SECONDARY DATA

The secondary data required for the study was collected from various
journals, books, magazines and website related to the subject of the study.

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TOOLS FOR ANALYSIS

For presentation

 Bar diagram
 Pie chart
 Table

For analysis

 Percentage analysis

1.5 LIMITATIONS OF THE STUDY

1. The sample of size is limited to 50 only and the sample size may not
represent whole market
2. Some respondent did not give information because of their busy work
schedule

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 2. REVIEW OF LITERATURE

Rawani A M and M P Gupta [2002] in their study empirically explore the

differences in the role of is among public, private and foreign banks. Results
indicate that while, at present, only private and foreign banks have obtained
strategic advantages using IT, public sector banks, although late, have also realized
the importance of IT. It have been empirically proved that future impact of IS does
not varying significantly with banking groups. This suggests that IS effort put in
by public sector banks are in the right direction and can be expected to give them a
strategic advantage in future.

Mittal and Dhingra [2007] in their study suggest that Indian banking
industry has witnessed a remarkable development in the information technology in
the last few years banking transaction become easier and customer due le
technological improvements to play a supportive and key role bank are providing a
lot at services which are the combination at electronics and information technology
like automatic teller machines ATM plastic money ir credit card debit card and
smart card etc aims have emerged as the most favoured channel for offering
banking service to the customers in the world.

Shoruq Fathi Eletter, Saad Ghaleb Yaseen And Ghaleb Award Elrefac
[2010] although the credit decision approval in the banks has been subjective and
it up to the loan officer in most cases. Banks can improve their credit analysis
method through utilizing artificial intelligence technologies such as neural
network. Use of ANN has proposed new techniques to evaluate loan application as
a decision support system in the field of banking credit system. The neural network
model is designed as such to represent the most influential factors, mostly decided
on the guidelines that loan officer use in the banks. Besides, the bank can
customize the strategies system according to their strategies. Further, more the
accuracy of their model proves that neural network can be useful for classifying
loan application.

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 G. Koteswara Rao and Roshan kumar [2011] banks can use technology
can improve their performance and they can get the sustainable competitive
advantages. According to our study, we conclude that proper integration of BI &
KM can help bank to get wide benefits. It include historical context, not just a
shallow examination of what is apparent and easily accessible. Instead of nuggets
or pockets of information on corporate data base, it provide a true view of attitudes
and behaviour, combine structured and unstructured data, meshes solicited
feedback and keep a real time pulse on business (kadayam 2002). Bank will be
able to manage explicit information and there by transform the information to
knowledge which turn can help bank in making better decision and lead them to
better position in contemporary business competitive environment

Mathew Sainsbury, FST media [2012] Artificial intelligence has been

identified has next technological frontier for banks has they look to leverage their
investment in mobile to drive greater customer engagement. Bank including
standard charted, attrition and training, and reduce human error will point in the
engagement and transaction process. Banking executives see potential in AI
program to fulfil the role of a virtual personal assistant, following the success of
apple’s Siri platform

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 BANKING SECTOR IN INDIA

Modern banking in India originated in the last decade of 18th century.

Among the first bank was the bank of Hindustan, which was established in 1770
and liquidated in 1829-32 and the general bank of India, established in 1786 but
failed in 1791. The largest and the oldest bank which is still existence is the state
bank of India. It originated and started working as the bank of Calcutta in mid-
june1806. In 1809, it has renamed as bank of Bengal. This was one of the three
banks founded by presidency government, the other two were bank of Bombay and
bank of madras. The three banks were emerged into imperial bank of India, which
upon India’s independence, become the state bank of India in 1955. For many
years the presidency banks had acted as quasi central banks, as did their
successors, until the reserve bank of India was established in 1935, under the
reserve bank f India act, 1934.

In 1960, the state bank of India were given control of eight state associated
banks under state of India act 1959, these are now called associate banks. In 1969
the Indian government nationalised 14 major private banks. One of big bank was
bank of Indian economy. They dominate the banking sector because of their large
size and widespread networks.

The Indian banks are broadly classified into:

 Scheduled banks
 Non scheduled banks

The scheduled banks are those included under the 2 nd schedule of reserve bank of
India act, 1934 and which carry out normal business of banking such as accepting
deposits, giving out loans and other banking services. The major difference
between scheduled commercial banks scheduled cooperative banks is their
holding pattern, since cooperative are registered under the cooperative societies
act as cooperative institution . The scheduled banks are further classified into:

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  State bank of India & associates
 Regional rural banks
 Foreign banks
 Other Indian private sector banks
 Other public sector banks
 Nationalized banks

Non scheduled banks as per the second schedule bank of banking regulation act
of 1965 a bank must satisfy the following conditions, to get fully authorized to run
banking in India. The required two conditions are:

 The banks should have paid a reserve capital f 5 lakh rupees to the reserve
bank of India and this capital must be maintained throughout their
operational period.
 The RBI must be satisfied that the banks affairs are not conducted in a
manner that is harmful to the interest of its depositors.

By 2011 and counting, the number of non scheduled banks in our country
increased one by one. Till today India has only four non scheduled banks in
existence. These four non scheduled banks under operations in India are:

 Akhand anad cooperative bank limited

 Alavi cooperative bank limited
 Amaranth cooperative bank limited
 Amond nagrik sahakari bank limited

The Indian banking sector has witnessed wide ranging changes under the
influence of the financial sector reforms initiated during the early 1990’s. The
approach to such reforms in India has been one of gradual and non disruptive
progress through a consultative process. The emphasis has been on deregulation
and opening up the banking sector to market forces. The reserve bank of India has

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been consistently working towards the establishment of an enabling regulatory
framework with prompt and effective supervision as well as the development of
technological and institutional infrastructure

NEW TRENDS IN INDIAN BANKING SECTOR

Today, we are having fairly well developed banking system with different classes
of banks- public banks, foreign banks, private banks, regional rural banks and
cooperative banks. The banking industry is beginning to incorporate the traits and
practise that were once the domain of fintec

Start-ups. Banks and credit unions have become more comfortable with a
faster pace of innovation, using data and analytics more extensively and digitizing
processes as opposed to simply turning paper into PDFs The important of
innovation and developing new solutions that take advantage of data, advanced
analytics, digital technologies and new delivery platforms has never been more
important. We are seeing organizations innovate in targeting, expanding services,
reconfiguring delivery channels, delivering proactive advice, integrating payments
and applying block chain.

FEW TRENDS IN INDIAN BANKING SECTOR ARE:

 Digitization
 Enhanced mobile computing
 UPI ( unified payments interface)
 Block chain
 Artificial intelligence robots
 Digital only banks
 Cloud banking
 Biometrics
 Wearable

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DIGITIZATION

With the rapid growth of digital technology. It became imperative for

banking and financial services in India to keep up with the changes and innovate
digital solutions for the tech savvy customers. Besides the financial institution,
insurances, healthcare, retail, trade and commerce are some of the major industries
that are experiencing the enormous digital shift. To stay competitive, it is
necessary for the banking and financial industry to take the leap on the digital
bandwagon. Modern trends in banking system make it easier, simpler, paperless,
signature less and branchless with various features like IMPS (immediate payment
service), RTGS (real time gross settlement), NEFT (national electronic funds
transfer), online banking and tele-banking. Digitization has created the comfort of
“anywhere and anytime banking”. Along with increased customer satisfaction

ENHANCED MOBILE COMPUTING

Mobile banking is one of the most dominant current trends in banking systems.
As per the definition, it is the use of a smart phone to perform various banking
procedure like checking account balance, fund transfer and bill payments, without
the need of visiting the branches. The trend has taken over the traditional banking
systems. In the coming years, mobile banking is expected to become even more
efficient and effortless to keep up with the customer demands. Mobile banking
future trends hint at the acquisition of loT and voice enabled payment services to
become the reality of tomorrow. These voice enabled services can be found in
smart everything. Top industry leader are collaborating to adopt loT connected
networks to create mobile banking technologies that require user’s voice to
operate.

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UPI (unified payments interface)

UPI or unified payments interface has changed the way payments are made.
It is a real time payments system that enables instant interbank transactions with
the use of mobile platform. In India, this payment system is considered the future
of retail banking. It is one of the fastest and most secure payment gateways that is
made by national payments corporation of India and regulated by the reserve bank
of India. The year 2016 saw launch of this revolutionary transaction system. This
system makes fund transfer available 23 hours, 365 days unlike other internet
banking system. There are approximately 39 apps and more than 50 banks
supporting transaction systems. In the post demonetization in India, this system
played a significant role. In the future, with the help of UPI, banking is expected to
become more ‘open’.

BLOCK CHAIN

Block chain is the new kid on the block and the latest buzzword. The
technology that works on the principle of computer science, data structures and
cryptography and is the core component of crypto curenncy, is said to be the future
of banking and financial services globally. Block chain uses technology to create
blocks to create blocks to process, verify and record transactions, without the
ability to modify it. Several aspects of banking and financial services like
payments, clearance and settlement systems, stock exchange and share markets,
trade finance and leading are predicted to impacted.

ARTIFICIAL INTELLIGENCE ROBOTS

Several private and nationalized banks in India have started to adopt

chatbots or artificial intelligence robots for assist in customers supports services.
For now, the use of this technology is at a nascent stage ad evolution of these
chabots is not too far away. Usage of chatbots is among the many emerging trends
in the Indian banking sector that is expected to grow. more chatbots with higher

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level of intelligence are forecasted to be adopted by the banks and financial
institution for improved customer interaction personalizes solution.

DIGITAL ONLY BANKS

It is recent trend in Indian financial system and cannot ignored. With the
entire banks and financial services industry jumping to digital channels, digital
only banks are emerged to create paperless and branchless banking system. This is
a new breed of banking institution that are overtaking traditional models rapidly.
These banks provide banking facilities only through various IT platforms that can
be accessed on mobiles, computers and tablets. It provides most of the basic
services in the most simplified manner and gives access to real time data. The
growing popularity of these banks is said to be a real threats to traditional banks.
ICICI pockets in India’s first digital only bank. These banks are attractive to the
customers because of their cost effective operation models. At the same time,
though virtually, they provide high speed banking services at very low transaction
fees. In today’s fast lane life.

CLOUD COMPUTING

Cloud technology has taken the world by storms. It seem the technology
will soon find its way in the banking and financial service sectors in India. Cloud
computing will improved flexibility and scalability, increased efficiency, easier
integration of newer technologies and applications, faster services and solutions
and improved data security. In addition, the banks will not to invest in expensive
hard ware and software as updating the information is easier on cloud based
models.

BIOMETRICS

Essentially for security reasons, a biometrics authentication system is

changing the national identity policies and the impact is expected to be
widespread. Banking and financial services are the one of the other industries that
will be experiencing the impact. With a combination of encryption technology and

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OTPs, biometric authentication is forecasted to create a highly secure database
protecting it from leaks and hackers attempts. Financial services in India are
exploring the potential of this powerful technology to ensure sophisticated security
to customer’s account and capital.

WEARABLES

With smart watch technology, the banking and financial service aiming to
create wearable for retail banking customers and provide more control and easy
access to data. Wearable have changed the way we perform daily activities.
Therefore, this technology is anticipated to be the future retail banking trends by
providing major banking services with just a click on a user friendly interface on
their wearable devices.

BANK WITH AI SERVICES

AXIS BANK has established in 1993 was first of the new private bank to
have begun operation in 1994 after the government allowed new private banks to
establish. Axis bank ltd has been promoted by the largest and by the best financial
institution of the country, UTI. The bank was set up with a special capital of RS
115 cores, lic RS7 cores and GIC and its subsidiaries contributing RS 1.5 core
each. Customer satisfaction and product innovation tuned to diverse the need of
individual and corporate clientele and also it increase efficiency and effectiveness
build on ethical practices.

POLICIES OF AXIS BANK

 Compensation policy
The main objective of this policy is to establish a system whereby the bank
compensates the customer for any bank or any financial loss he/she might incur
due to deficiency in service on the part of the bank or any act of omission or
commission or commission directly attributable to the bank subject to the terms
prescribed under paragraphs on award of compensation and force majeure at the
end the policy

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 Policy of bank deposit

One of the important function of the bank is to accept deposits from public
for the purpose of lending. In fact, depositors are the major stakeholder of the
banking system. The depositors and the interest from the key area of regulatory
frame work for banking in India and has been enshrined in the banking regulation

HDFC BANK was incorporated on august 1994 by the name of ‘HDFC

BANK LIMITED’, with its registered office in Mumbai, India. HDFC bank
commenced operations as scheduled commercial bank in January 1995. The
housing finance corporation was among the first to receive an in principle approval
from reserve bank of India to set up a bank in the private sector, as part of RBI’s
liberalisation of Indian banking industry in 1994. HDFC bank is head quartered in
Mumbai. The bank at the present has an enviable network of over 1416 branches
spread over 550 cities across India. All branches are linked on an online real-timer
basis. Customers in over 500 locations are also serviced through telephone
banking. The bank also has a network of about over 3382 networked ATMs across
these cities. The promoter of company was incepted in 1977 is India’s premier
housing finance company and enjoys an impeccable track record in India as well
as in international markets.

PRODUCTS OFFERED BY BANK

SAVING ACCOUNT

 Zero balance account

 Easy access saving account
 prime saving account

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CURRENT ACCOUNT

 Normal current account

 Business advantage account
 Business classic account
 Shipping and marine time current account
 Inland road transport current account Travel, tourism and hospitality current
account

NRI ACCOUNT

 NRE saving account

 NRO saving account
 NRI saving account
 PIS account
 NRE salary account
 RFC account

YES BANK ltd is engaged in proving a range of banking and financial

services. The bank operates in four segments: Treasury Corporation, wholesale
banking retail and other banking operations. the treasury segment includes
investment all financial markets activities under taken on behalf of the bank’s
customer’s trading maintainers requirements and reserve mobilization from other
bank and financial institution. The bank branch and atm network is spread in 27
states and 7 union territories. Yes incorporated on November 21 2003.the bank
obtained commencement of business on January 21 2004.

PRODUCT AND SERVICES

o Saving deposit
o Current deposit
o Fixed deposit

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 o Online banking
o Loan against property
o Transaction zone
o Commercial vehicle loan
o Personal loan

ICICI BANK is the largest private sector bank in India in terms of market
capitalization. It is also the second largest bank in India in terms of assets with
total assets of 3,674.19 billion as on June 30, 2009. ICICI bank was established in
1955 at the initiative of the world bank with the objective of creating a developed
financial institution for providing medium term and long term project financing to
Indian business. ICICI bank in year 1999 become the first Indian company and the
first bank from non Japan Asia to be listed on the new York stock exchange. In
October 2001, ICICI bank emerge with ICICI personal financial services limited
and ICICI capital service limited.

PRODUCT S OFFERED BY BANK

 Saving deposit
 Advantage deposit
 Special saving deposit
 Fixed deposit
 Recurring deposit

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 ARTIFICAL INTELLIGENCE

Machine with the ability to perform cognitive functions such as perceiving,

learning, reasoning and solve problems are deemed to hold an artificial
intelligence.AI when a machine has cognitive ability. The benchmark for AI is the
human level concerning reasoning, speech and vision According to father of
artificial intelligence, John MC Carthy, it is – The science and engineering of
making intelligent machines, especially intelligent computer programs. AI is a
way of making a computer, a computer controlled robot, or a soft ware thinking
intelligently , in the similar manner the human brain. It accomplished how human
brain think and how human brain learn, decide and work while trying to solve a
problem and using the outcome of the study as a basis of developing intelligent
has two components:

1. Automation
2. Intelligent

AI can improve customer personalization, identify patterns and connections

that human can’t and answer questions about banking issues in real time. Financial
institutions are already finding success with AI. However, what may be ‘amazing’
today will be table in near future.AI is not to new to banking. If we consider that
the definition of AI is ability for machines to interact to do task previously done by
humans, the history of AI goes to back 50s in the banking industry. Through
machine interaction and learning, natural language can be processed and decision
made faster and more accurately than was possible in the past.

One of the outcomes of Artificial intelligence is that machine learning

improves over time as more data is processed and more positive results achieved.
In fact, Ray Kurzweil from Google estimates that AI will surpass human
intelligence by 2019. Despite this achievement, and successes in virtually all
industries, banking has taken more cautious approach. Heighted interest in AI has
occurred because of both capabilities and business needs. The explosive growth of

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structured and unstructured data, availability of new technologies such as cloud
computing and machine learning algorithms, rising pressures brought by new
competition, increased regulation and heightened consumer expectation have
created a ‘perfect storm’ for the expanded use of AI in financial services.

ARTIFICIAL INTELLIGENCE IN BANKING

AI intelligence is the banking future of banking as it brings the power of advanced

data analytics to combat fraudulent transaction and improve compliance.

According to PWC Fin Tec Trends report (India), Global investment in AI

application touched USD 5.1 million in 2016. Not only PNB but banks like SBI,
HDFC, ICIC, and Axis bank in India have touched AI.

 PERSONALIZED FINANCIAL SERVICES

Personalized connect will reach new heights as automated financial advisor
and planners provide expertise in making financial decisions they analyse
market temperature against the users financial goals and personal portfolio
and Dependence on physical cash, Thereby expanding the reach of money to
greater level
 SMARTER WALLETS
Digital wallets are touted the future of world payments technologies, with
major players like Google, apple, PayPal and others jumping on band wagon
and developing their own payment gateways this decrease the dependence
on physical cash, Thereby expanding the reach of money to greater levels.
 UNDERWRITTING
The insurance sector is also coming up with a storm as they are moving
towards congruent automation. By utilizing AI system that automate the
underwriting process the organization come armed with more granular
information To empower their decisions
 VOICE ASSISTED BANKING
Physical presence is slowly fading away as technology empowers Customers
to use banking service with voice commands and touch screen. The natural

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 language technology process queries to answer questions, find information
and connect Uses with various banking services
 DATA DRIVEN AI APPLICATION FOR LENDING DECISION
Application embedded in and user devices. Personal robots and financial
institutions servers are capable of analyzing a huge volume of data, providing
Customized financial advice, calculations and forecasts. these application
can also develop financial plans and strategic through research, regarding
various customized Investment opportunities, loans, rates, fee etc and track
the progress
 CUSTOMER SUPPORT
As speech processing and natural language processing technology nature, we
are drawing closer to the day, when computes could handle
Most customer queries. This would mark an end to waiting in line and hence
result In happier customer

ADOPTION OF AI IN BANKING

Most banks and credit unions are in the early stage of adopting AI
technologies. According to a survey conducted by narrative science in conjunction
with research institute, 32% of financial services executive surveyed confirmed
using AI technologies such as predictive analytics, recommendation engines, voice
recognition and response For those firms not adopting AI, challenges such as fear
of failure, siloed data sets and regulatory compliance were cited. Based n the
narrative science survey, 12% of the overall group weren’t using AI yet because
they felt it was too new, untested or weren’t sure about the security Another key
challenge for many organisations was that there no clear internal ownership of
testing emerging technologies-only 6% of those surveyed having a innovation
leadership or an executive dedicated to testing new ideas and processes. Not
having a person or department assigned to testing new ideas is obviously
problems. The banking and financial service sector will see the increasing adoption
of AI in the day ahead, to make internal operations experience more effective.
India’s largest private sector bank, Axis bank, is looking disruptive technologies

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from start-ups in Fin Tec space. Launching the fourth edition of the digital
innovation summit in Ahmedabad on Thursday, Nitin Chug, country head- digital
banking, said Artificial intelligence would be the most prominent technology
driver for the banking sector in the coming days.

“Banks have increasingly started engaging with the start-up community to

bring about effective fintec solutions. There are not merely aimed at customer
experience, but are also aimed at the bank’s own internal operations. AI is the most
prominent technology available at present. Once embedded they could alter a lot of
processes in al organisation, not just banks, “Chug said during the launch

BASICS OF ARTIFICIAL INTELLIGENCE

Banking artificial intelligence is technology that makes the inference and

decision that used to require direct human involvement. Cross-industry AI has
been hot twice before (the term coined in 1956). Today’s third wave has hit
banking. So it’s useful to highlight the textbook attributes of AI as taught in
computer science course.

 Reasoning
 Knowledge
 Planning
 Learning
 Natural language processing
 Perception
 Manipulating the physical world

The ultimate goal is generalised intelligence: think of the computer in star trek or
the replicates in blade runner. We’ve clearly a long way from that, but there’s no
doubt that, but there’s doubt that we’ve made significant progress as the forces
powering AI-computing power, data and algorithms have all advanced to the point
where technology can play a meaningful role in banks. It’s also worth noting that
the bar that defines which technology qualify as AI is continually moving; optical

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character recognition (OCR) used to be thought of as AI, but now it’s simply a
technology that consumers can access via scanners plugged into their home
computers.

It’s also necessary to draw the distinction between AI, which infers, and
brute force computing, which applies a set of rules, sometimes a very big set of
rules, to a set of inputs and returns an answer. If presented with inputs that its rules
had never encountered, the brute force method would not be able to respond; any
AI worth its salt would at least have a probabilistic answer. Some technologies,
RPA in particular, are not technically AI (at least not most of them), but advances
are continually moving them closer to using AI methods. While we don’t want to
be pedantic about defining AI, the term is often used somewhat sloppily. Simply
applying a lot of computer power to a lot of data is not AI, no matter how good the
initiative might be for marketing

CUSTOMERS VIEWS ON ARTIFICIAL INTELLIGENCE

According to HBR, more people see AI as positive rather than negative

(45% vs 7%), saying it will have a positive impact on their personal lives- 92% are
expecting ‘proper’ artificial intelligence to arrive eventually. Of those surveyed,
more than half would trust AI to give them financial advice, despite around the
same proportion being concerned over cyber attacks and data protection. Of
course, still prefer dealing with people when it comes to customer service-4 in 5
according to a recent study. However, in the same research, 67% of consumers and
91% businesses said they felt that customer service online and more intuitive to
serve end users.

And this is the same as any technology in the regard: consumers will
embrace it if enhances their lives. What we’re seen so far is technology –first,
making it easier for the supplier (resources and management wise) but not
necessarily for the end users. The potential of artificial intelligence to help
customers manage their finance is huge-but it has to be refined, and then offered to
the people who want in the right way

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THE BENEFIT OF AI IN BANKING SECTOR

Despite early hesitation in the industry around commitment to A.I, these

are several use cases:

 ENHANCED CUSTOMER PERSONALIZATION

The number one trend identified in the 2017 retail banking trends And
predictions was a renewed focus on the customer experience in another digital
banking report, The power of personalization in banking, it was found that
consumers want to share their personal Information if they can receive custom
advice, offers and service based on the share insight. Personalized communication
and advice as enabled by A.I can be reflected by robot advisors –online wealth
management services that provide automated, algorithm based portfolio
management advice without the help of a human counterpart. With AI, algorithm
can regularly rebalance the portfolio to maintain the original investment
guidelines and operate at cost less than 100 basis point

 PRODUCTIVITY GAIN

From customer communication flows to basic back office processing, AI

can take rather routine, repetitive processes and make them both efficient and
effective. What once was very tedious process of new customer on boarding can
now become highly personalized interaction based on individual activity post
opening. This level of personalization was almost impossible to achieve without
the benefit of machine learning and AI.

 FRAUD DETECTION

One of the earliest uses of AI in banking was around fraud detection. By an

ongoing review of account activity patterns can be monitored, with aberration to
pattern being flagged for further review. Over the last decade, AI has not only

23
significantly improved the monitoring processes, but is now able to respond in
real time potential fraud.

 BETTER CUSTOMER RECOMMENDATION

Beyond more personalized customer communication, AI provide the ability

to have improve customer recommendation and advice. Mobile apps are simple let
users can track their spending and increase their saving with their automated,
personalization recommendation via a specialized debit card linked with their
smart phone app.

HOW AI IS DISRUPTING THE BANKING INDUSTRY

It’s an exciting time for financial services. A veritable smorgasbord of new,

interrelated technologies are brewing up a perfect storm of disruption in the
industry, including block chain, data science, cloud computing and biometrics.
Arguably, however, it is a significant advancement being achieved in the world of
artificial intelligence that has the most transformational impact on banking. In turn,
AI is expected permanently change the banking in profound ways during the
coming months and years.

Few business sectors are currently more focused on developing AI for its
on betterment than banking, as financial institution seek to gain a competitive edge
on their peers by implementing the technology to achieve improvement in speed,
cost, accuracy and efficiency, as well as meet customer needs in an altogether
more comprehensive manner. Much of the anticipation surrounds the ability of
machines to replicate, and often exceeds, what human are able to do in banking.
By collecting and utilising data to identify a whole of patterns, more adept at
predicting activity that will ultimately make bank more efficient, from the front
office to back end.

24
THE BANKING SECTOR BEING INFULENCED BY AI

In term of improving the customer experience, it is perhaps that chat bots

that are the most visible form of AI being across the sector. These automated
services assistance are providing customers with convenience of resolving of the
quires via an online messaging system, perhaps using their laptops or smarter
phones, instead of visiting the branch. Through machine learning techniques,
more importantly consistently with regards to their ability to accurately identify
the customer’s issue and respond with the appropriate solution. As such, today
they can recognise tens of thousands of variations on common questions a
customer is likely to ask Chat bots are now practically an industry standard, and
while they may not be able to perform more complicated tasks, they are
undoubtedly improving their capabilities.

In January, the common wealth bank of Australia launched its in house bot
ceba to more than a million customers, and which at last count could boast of
being able to perform 200 tasks. But CBA expects that by the end of the years. In
additional to answering the customer’s questions on an online platform, Nina can
also pass on more complex calls to members to staff. The bot has emerged to
achieve a 78% first-contract resolution within the first three months, in additional
to customers adoption rate of 30,000 conversations per month during this month.

But in the term of AI development and what could ultimately to be achieved

in banking, chat bots appear to be just the beginning, chat bots appear to be just the
beginning. At the other end of the complexity scale is the usage of bots on the
trading floor, primarily anew to help traders perform more competently. In the
sectors such algorithm trading, AI algorithm can be developed in order to produce
highly refined investment strategies. As opined last year by Michael Harte,
Barclays group head of innovation , the clearest use case for AI in banking is “in
large algorithmic trading”, which means “using high amount of velocity data to
outsmart the competition and to provide better instrument and value to customers”.

25
AI is proving especially useful in high frequently trading, which is a special type
of algorithm trading characterised by high order rates and often trade execution.
Given the short window of the time in which trading opportunities present
themselves in such markets, robots can be programmed to more efficiently
capitalise on such opportunities than humans.

Swiss bank UBS last year debuted its two new AL system on the trading
floor, one of which is a system that analyses reams of market data to identify
trading patterns, and thus formulates new strategies for trading volatility for the
bank’s clients. Through machines learning, therefore, the system can improve its
trading performance, which should ultimately translate into greater market returns
for UBS trading division. The second is a relatively more straightforward protocol
that was jointly developed with Deloitte and which addresses the post-trade
allocation preference of the bank’s clients .the system cans through emails sent by
clients to identify their requests for splitting up large block trades among their
various funds, before executing the transfer. By doing so, a minute task can now
be accomplished in just a few minutes, thus freeing up time for bankers to focus on
more important jobs

WHAT ARE AI TECHNOLOGIES?

AI based technologies aim at making computers copy intelligent human

behaviour performing specific task that only human used to be able to do. They
can “read “text, “see” image, and “hear “natural speech as organise and interpret
information to make prediction based on information. The main aims of AI
technology are:

1. Machine learning
2. Autonomics
3. Machine vision
4. Natural language processing

26
GENERAL PRINCIPLE FOR THE USE OF AI BY FINANCIAL
INSITUTION

The principles are divided over six key aspects of responsible use of AI, namely;

1. Soundness
2. Accountability
3. Fairness
4. Ethics
5. Skills
6. Transparency

SOUNDNESS

From a prudential perspective, soundness is the aspects of AI that is of

DNB’s primary concern. AI application in the financial sector Should first and
foremost be reliable and accurate, behave predictably, and operate within in the
boundaries of applicable rules and regulations, including non financial regulations,
such as the GDPR. The aspects become particularly important when financial firm
start to apply identical AI driven solutions and systematic risk may arise. Financial
firm applying AI in their business processes should demonstrate that they have
taken all the necessary measures to ensure their business continuity.

ACCOUNTABILITY

The working of AI application can be complex and difficult to understand.

Furthermore, AI may not always function as intended and can result in damages
for the firm itself, its customers and other relevant stake holders. Especially when
AI application becomes more material, financial firms should demonstrate
unequivocally that they operationalised accountability for AI application and they
have operationalised accountability for these applications throughout their

27
organisation. Model complexity or third party reliance should never be used as
arguments for limiting the organisation’s accountability.

FAIRNESS

Although fairness is a primarily conduct risk issues, it is vital for society

trust in the financial sector that financial firm’s AI applications- individually or
collectively- do not inadvertently disadvantage certain groups of customers.
Whether we are talking about AI that monitors transaction to detect money
laundering, or one that facilitates loan decision, financial firms should be able to
define their concept of fairness and demonstrate how they ensure that their AI
application behave accordingly.

ETHICS

As AI applications take on tasks that previously required human

intelligence, financial firm should ensure that the outcome of the system do not
violate the firm’s ethical standard. This moral obligation goes above and beyond
compliance with applicable legal requirements. Financial firm should ensure that
the customers, as well as other stakeholders, as well as other stakeholders, can trust
that they are not mistreated or harmed-directly or indirectly because of the firm’s
deployment of AI, even if such application operate within the boundaries of
applicable laws and regulations

SKILLS

As most AI application augment human task. Financial firms employees

and management will increasingly come to rely on AI applications to support them
in their work. Like with any other tools, wrong use can accidents and it is the
organisations responsibility to ensure that the senior management and compliance
function have an adequate level of expertise. From the work floor to the board
floor room, a sufficient understanding of the strength and limitation of the
organisation’s AI enabled systems is vital.

28
TRANSPARENCY

Transparency means the financial firm should be able to explain how they
use AI in their business processes, and how these application functions. Adherence
to this principle makes adequate risk management and internal audits. This also
means effective supervision of the correct workings of the firm’s AI applications
to ensure stable operations. When the materiality of AI application increase, so
should organisation’s should efforts in understanding and controlling the
application’s functioning

HOW WILL AI, AUTOMATION, AND ROBOTS IMPACT THE BANKING

SECTOR?

Digital solution provider’s state that one robot can work 24/7 and replace up
to eight employees, without asking for days off or a raise. Also, 75% of the current
banking operations undergo robotic process automation. Techno-pessimists are
alarmed, while optimist just envisions ways of smoothing out of the effects of what
is called the fourth industrial revolution. The digital future of the work can’t be
reversed and will expand to every activity sector.

What start bout four decades ago in gas stations with self services pumps
will become the norm is more conservative areas, including banking, law
enforcement and even government. Banking operations have been frozen in a
process that have not been changed in years, but is about to change drastically.

BENEFITS OF USING AUTOMATION, ROBOTS AND AI

Accuracy, predictability and removing any trace of human error are

primary goal of introducing robots in banking industry. automated system can
ensure compliance with internal regulation every time and collect data that will be
further used to calibrate system even more Furthermore, such systems generate
significant cost cuts after the initial setup of system, which can be quite expensive.

29
Yet, the 24/7 operating schedule, low maintenance cost and, in the case of AI, the
possibility of self improvement can easily motivate the investment. As an expert
in AI solutions from in data labs explains, by using deep learning and anomaly
detection, an AI algorithm can understand spending patterns. Since most people
are creature of habit, whenever there is a transaction that is not like the rest, either
by amount, geo-location or even the language used by the browser accessing the
bank, the machine triggers an alert, requesting additional verification steps from
the owner. This gives client peace of mind and saves the bank from important
financial and image losses.

The Role of Banking Industry

Banks play an important role and considered as life blood of today’s

economy because it handles cash, credits and other financial transactions. Banks
help customers and motivates them to save money and earn interest for a secure
future. Banks also extend financial assistance to the expansion of industries. Every
financial transaction done through the banks must be properly documented. To
implement this, the banks primarily use computers. Number of the channels that
banks use for operations are through ATM’s, mails, telephone banking, online
banking and mobile banking. The smooth operation of the banking world is done
through computers and networks are feasible only because banks use AI

Benefits of Artificial Intelligence

 For the economy, business and industries: AI can benefit the economy by
helping the evolution of work. Robots and AI will help people perform their
work better, not take their jobs.
 For humanity and society: AI enhances information throughput and
efficiency, helping people create new opportunities. People will have more
time to learn, experiment and explore.
 Expenditure pattern: AI can help in understanding the customer’s
expenditure pattern and customized plans can be offered to customers.

30
  Online banking and mobile banking: The online banking and mobile
banking become popular as a tool for 24/7 transaction. AI access customer
data, such as detailed demographics, website analytics and records of online
and offline transactions, machine learning can integrate and analyse
information.
 Offer High security: AI offers high security to the banking sector;
 AI mobile applications can make the transaction quicker and safer.
 Understand the user’s behaviour and offer personalized experience through
an app, banks handle customer-oriented operations easily while reducing
the cost of hiring additional employees

Limitations of Artificial Intelligence

 The production and maintenance of AI requires high costs.

 AI consists of advanced software programs that require regular updates to
meet the needs of the changing environment.
 AI might able to do, replacing adaptive human behaviour.
 AI makes the people lose their creative power, and can increase the
unemployment rate.
 AI in wrong hands can be serious threat to human kind, if individuals start
thinking destructively, they can generate these advanced machines.

ARTIFICIAL INTELLIGENCE - THE CHANGING FACE OF BANKING

IN INDIA

Artificial Intelligence in banking can interact with humans by making

decisions and in a convincing way encourage customers. AI enables banking
industry to know the customers preferences, ensure customer satisfaction, and help
the customers understand their expectations from the banks. Banks are actively
adopting new-age technologies for better growth prospects and to serve new-age
customers. From accounting to sales to contracts and Cyber security, AI is helping

31
banks transform operations across the board. With data analytics, blockchain and
machine learning, banks are future-proofing their offerings and services. Many
traditional banks have collaborated with fintech startups to offer modernized
banking solution to their customers. Traditional banks competing with tech-savvy
fintech players, moving to adopt newer technologies like artificial intelligence. AI
empowers banks completely redefine how they operate, establish innovative
products and services, and impact customer experience interventions. To get
competitive edge, banks will need to embrace AI and adopt into their business
strategy.

REASONS FOR ADOPTION OF AI IN THE BANKING SECTOR

 Immense competition in the banking sector

 Introducing self-service at banks
 To improve operational efficiencies
 Move towards process-driven services
 To focus on profitability and compliance
 Demand from customers for more customized solutions
 Effective decision making
 To reduce fraud and security risks
 To Increase employee productivity
 To augment human work through software robotics
 To manage huge volumes of data at record speed

AREAS OF ADOPTING AI IN BANKS

Many areas where banks are utilizing AI to streamline the processes include:

 Accounting
 Merchant Services
 Fraud and Cyber security
 Risk Management

32
  Compliance

 Customer Service
 Wealth management
 Business process management
 Physical Security
 Asset Management
 Internal Audit
 Sales
 Marketing
 Financing and loans (credit assessment)

IMPACT OF ARTIFICIAL INTELLIGENCE IN BANKING

Banks are using AI applications to recommend, forecast and execute tailored

financial advice to customers and also gain quick information on financial
strategies, loan rates and the future market progress.

 Customer Satisfaction: AI helps banks in providing personalized and more

efficient services to customers and in increasing revenue, faster decision
making and having a good customer relationship.
 Chatbots: Bot is the short form of Robot and Chatbot is an automated chat
program that is either run automatically or follows a pre-determined path.
Chatbot is a way of using AI in the form of robotics in banking. Chatbots
are available 24/7 and provide efficient customer service.
 Personalized Financial Guidance: AI helps customers to make easy and
quick financial decisions by way of up to date information on the current
market structure as well as provide suggestions on stocks and bonds in
which customers can invest.
 Digital Wallets: Digital wallets provide digital money to the customers in
purchasing any item online either with a mobile phone or a computer.

33
 Interactive voice response systems (IVRS): An automated voice system
which interacts with customers, answer certain questions and routing calls
to appropriate banking departments and gives a pleasant experience to
customers.
 Detecting Fraud: AI captures banking fraud by scanning through the vast
transactional data and tracking down any unorthodox activities or irregular
behavior patterns. AI minimizes banking fraud, helps in immediate action,
protect security breaches and helps in powerful machine learning.
 Improving customer support: Customer satisfaction impacts the
performance of banking industry and shapes people’s perceptions of the
financial institution’s brand and also influences banks client targeting and
retention efforts.
 Helps in knowing Creditworthiness: Banks still rely on one’s revenue and
banking transactions to determine whether they are creditworthy. AI loan
decision systems are using machine learning to observe the patterns and
behaviours to determine whether a user can really be a good customer or
not.
 Better Customer Services: Using data gathered from users' devices, AI-
based relay information using machine learning by redirecting users to the
source. AI-related features also enable services, offers, and insights in line
with the user's behaviour and requirements.
 Better regulatory compliance: AI tools usually rely on cognitive fraud
analytics that observe customer behaviours, track transactions, identify
suspicious activities, and assess the information of different compliance
systems. AI is providing greater value to customers through personalization,
minimizing risks and costs, improving employee productivity and ensuring
higher regulatory compliance.

34
  Risk management: Mitigating fraud by scanning transactions for suspicious
patterns in real-time, measuring clients for creditworthiness, and enabling
risk analysts with right recommendations for curbing risk.

 Trading and Securities: Robotic Process Automation (RPA) helps in

security settlement through reconciliation and validation of information in
the back office with trades enabled in the front office. AI facilitates the
overall process of trade enrichment, confirmation and settlement.
 Credit Assessment: AI can analyse all data sources together to generate a
coherent decision. In fact, banks today look at creditworthiness as one of
their everyday applications of AI.
 Portfolio Management: AI and machine learning-based technology
platforms make customised portfolio profiles of customers based on their
investment limits, patterns and preferences. Banking and artificial
intelligence are at a vantage position to unleash the next wave of digital
disruption.

Thus, AI has transformed every aspect of the banking processes faster, money
transfers safer and back-end operations more efficient.

CHALLENGES OF ARTIFICIAL INTELLIGENCE IN BANKING

Few key challenges faced by the banks are:

 Developing a thinking artificial systems are currently too difficult to

achieve in practice.
 Wide spread use of AI raises a number of ethical, moral and legal issues
that are yet to be addressed.
 Benefit of AI technologies accrue to a few rich and wealthy owners of
investment capital.
 Possess high negative impact on traditional skills and increasing inequality.
 Difficulty in Customer segmentation.

35
  Lack of credible and quality data.
 Diverse language set.
 Lack of skilled engineers.

 Unavailability of people with right data science skills.

 Lack of clarity of business goals.
 No clear internal ownership of testing emerging technologies.

MEASURES TO OVERCOME THE CHALLENGES OF AI

The challenges of AI can be overcome by:

 AI has the ability to streamline processes and boost productivity, but this
can only be achieved if banks utilise machines to their full potential AI can
find patterns, trends and associations, discover inefficiencies, learn and
become better, execute plans,
 AI can predict future outcomes based on historical trends,
 AI can inform fact based decisions.
 Articulate interactions between managers and technologists for common
interpretation of technology.
 Open up the discussion across bank, create boundaries, stimulate attractors,
encourage dissent and diversity, manage starting conditions and monitor for
emergence.
 Duplicate data, log data and present it when needed.
 Leading banks should hire Chief AI Officers while investing in AI labs and
incubators.
 AI-powered banking bots are being used on the customer experience front.
 Intelligent personal investment products should be made available.
 Moving towards custom in-house solutions that leverage sophisticated
ontologies, natural language processing, machine learning, pattern

36
 recognition, and probabilistic reasoning algorithms to aid skilled employees
and robots with complex decisions.
 Decision support and advanced algorithms allow the automation of
processes that are more cognitive in nature.
 Incorporate advanced self-learning capabilities.
 Sophisticated cognitive hypothesis generation/advanced predictive
analytics.
 Provide automated AI-powered customer service.
 Chatbots can be “employed” to act as customer service agents and serve
customers continuously throughout a day. Routine and basic operations i.e.
opening or closing the account, transfer of funds, can be enabled with the
help of chatbots

THE FUTURE OF ARTIFICIAL INTELLIGENCE IN BANKING

Due to the development in the field of AI technology, AI is going to be

stronger and smarter in the future, which will help any customer to have a secure
banking experience. AI will provide the foundation for increased product and
service innovation. Further, AI has the potential to transform customer experiences
and establish entirely new business models in banking. To achieve better results,
there needs to be collaboration between humans and machines that will require
training and a reassessment of the future of work in banking. Also, mass
customization is the key to unlocking significant opportunities in the future and
can be tapped only through technologies like AI and block chain.

The banks are harnessing the power of AI to deliver new customer

experiences with various solutions and are setting new standards for the Indian
banking ecosystem, thereby charting a new wave by embracing tech intensity. AI
technology transforms data into a digital format. It helps in enhancing customer
experience. It helps in saving time both for the customer as well as for the bank. It
helps in reducing human error. It helps in building a strong and loyal customers. It

37
helps in the movement of large cash inflow and outflow. It helps in dealing with
cashless transactions from any place and at any time.

Table 4.1 Showing Satisfaction of Employees While Using Ai in Bank

Options Respondents Percentage (%)

Highly Satisfactory 15 30
Satisfactory 12 24
Neutral 8 16
Highly Dissatisfactory 5 10
Dissatisfactory 10 20
Total 50 100

(Source: Primary Data)

Chart 4.1 Showing Opinion Regarding Satisfaction of Employees While Using AI
in Bank

38
 Percentage
35
30
30
25 24
20
20
16
15
10 Percentage
10
5
0
ry ry l y ry
cto cto utra cto
r
cto
sfa fa Ne fs a sf a
ati tis ati ati
S Sa iss ss
l y D Di
gh l y
Hi gh
Hi

INTERPRETATION

From the above table and figure, 54% respondents revealed sometime they are
satisfied with the service provided by bank through AI, 16% are neutral, 30% are
dissatisfied with the service.

39
 Table 4.2 Showing the Transparency of Banking Sector through AI

Options Respondents Percentage (%)

Sometimes 15 30
Never 20 40
Often 13 26
Occasionally 2 4
Total 50 100
(Source: Primary
Data)

Chart 4.2 Showing the Transparency of Banking Sector through AI

Percentage
35
30
30

25 24

20 Percentage
16
15
10
10

0
Sometimes Never Often Occasionally

INTERPRETATION

From the above table and figures shows, 30% employees respond sometimes the
transparency of bank increase through AI, 40% responds never, 26% responds
often and 4% occasionally.

40
 Table 4.3 Showing Opinion Regarding Efficiency & Transparency of Machine
Power

Options Respondents Percentage (%)

Strongly Agree 15 30
Agree 12 24
Neutral 8 16
Strongly Disagree 5 10
Disagree 10 20
Total 50 100

(Source: Primary Data)

Chart 4.3 Showing Opinion Regarding Efficiency and Transparency of Machine
Power

20%

30%

Strongly Agree
Agree
10% Neutral
Strongly Disagree
Disagree

16%
24%

INTERPRETATION

Above table and figures shows that 30% respondents strongly agree with machine
power, 24% of respondent agree, 16% respondents neutral, 10% respondents are
neutral and 20% are disagree.

41
 Table 4.4 Showing Opinion Regarding Physical Problem through AI

Options Respondents Percentage (%)

Loss of Eye Sight 9 18

Headache 25 50

Stress 13 26

Others 3 6

Total 50 100

(Source: Primary Data)

Chart 4.4 Showing Opinions Regarding Physical Problem through AI

Percentage
50
50
45
40
35
30 26 Percentage

25
18
20
15
10 6

5
0
Loss of Eye Sight Headache Stress Others

INTERPRETATION

From the above table and figures 18% respondents have loss of eye sight, 50% of
respondents have headache, 26% of respondents have stress and 6% have other
physical problem.

42
 Table 4.5 Showing about the Training Methods Provided By Bank

Options Respondents Percentage (%)

On The Job Training 15 30

Off The Job Training 20 40

Lecturing 13 26

Others 2 4

Total 50 100

(Source: Primary Data)

Chart 4.5 Showing about the Training Methods Provided By Bank

Percentage
40
40
35 30
26
30
25
20
Percentage
15
10 4
5
0
g
in
g g rs
in
in
in urin the
a a ct O
Tr Tr Le
ob ob
heJ heJ
T T
On Off

INTERPRETATION

From the above table and figures the bank provide 30% off the job training, 40%
on the job training, 26% through lecturing and 4% other methods.

43
 Table 4.6 Showing Changes in Banking Sector through AI

Options Respondents Percentage (%)

Highly Resistant 20 40

Resistant 14 28

Moderately Resistant 3 6

Susceptible 13 26

Total 50 100

(Source: Primary Data)

Chart 4.6 Showing Changes in Banking Sector through AI

Percentage
40
40
35
28
30 26

25 Percentage
20
15
10 6

5
0
Highly Resistant Resistant Moderately Susceptible
Resistant

INTERPRETATION

The above table and figures shows that 40% of employees are highly resistant with
changes in banking sector, 28% are resistant, 6% are moderately resistant and 26%
susceptible .

44
 Table 4.7 Showing Cost of Implementation of AI

Options Respondents Percentage (%)

Costly 20 40

Affordable 15 30

Less Cheap 10 20

Cheap 5 10

Total 50 100

(Source: Primary Data)

Chart 4.7 Showing Cost of Implementation of AI

Percentage
40
40

35 30
30

25 20 Percentage

20

15 10
10

0
Costly Affordable Less Cheap Cheap

INTERPRETATION

From the above table and figure shows that 40% responds cost of
implementation of AI in banking sector costly, 30% responds its affordable, 20%
responds less cost and10% are cheap

45
 Table 4.8 Showing the Knowledge and Skill to Use AI

Options Respondents Percentage (%)

Technology Skill 20 40

Data Entry Skill 13 26

Strong Typing Skill 4 8

Other Skill 13 26

Total 50 100%

(Source: Primary Data)

Chart 4.8 Showing the Knowledge and Skill to Use AI

Percentage
40
40
35
30 26 26

25 Percentage
20
15
8
10
5
0
Technology Skill Data Entry Skill Strong Typing Other Skill
Skill

INTERPRETATION

From above table and figures, shows that 40% respondent’s responds technology
skill is required to use AI, 26% responds data entry skill, 8% responds strong
typing skill and 26% responds other skill.

46
 Table 4.9 Showing the Benefit of AI in Banking Sector

Options Respondents Percentage (%)

Customer Satisfaction 15 30
Chat Bots 25 50
Detecting Fraud 5 10
Better Decision Making 5 10
All of them Above 0 0
Total 50 100

(Source: Primary Data)

Chart 4.9 Showing the Benefit of AI in Banking Sector

Percentage
50
50
45
40
30
35
30
25
20 Percentage
15 10 10
10
0
5
0
on s d g e
ot au in ov
cti B Fr ak b
fs a at M A
ti Ch tin
g
on em
Sa c isi th
er te ec f
m De rD Al
lo
usto tte
C Be

INTERPRETATION

From the above table and figures shows 30% respondents responds AI in banking
sector benefit the customer satisfaction, 50% are chats bots ,10% responds
detecting fraud, 10% responds better decision

47
 Table 4.10 Showing the Security Measures Provided By AI in Banks

Options Respondents Percentage

Transaction Monitoring 20 40

Mobile Number Masking 15 30

Captcha Implementation 10 20

Instant Alert 5 10

Total 50 100

(Source: Primary Data)

Chart 4.10 Showing the Security Measures Provided By AI in Banks

Percentage
40
40
35 30
30
25 20
20
15 10 Percentage
10
5
0
g g on t
rin kin er
ti o a s ta
ti Al
on en nt
rM m st
a
n
M be pl
e In
c tio Nu
m
Im
sa ile ha
ran ob pt
c
T M Ca

INTERPRETATION

From above table and figures shows, 40% of employees respond transaction
monitoring security is provided by AI, 30% responds mobile masking, 20%
responds CAPTCHA implementation, 10% respond instant alert.

48
 Table 4.11 Showing Workforce Challenges in Banking System through AI

Options Respondents Percentage

Inadequate Capital Adequacy 20 40
High Transaction Cost 14 28
Technology Up gradation 2 4
Asset Liability Management 14 28
Total 50 100

(Source: Primary Data)

Chart 4.11 Showing Workforce Challenges in Banking System through AI

Percentage
40
40
35 28 28
30
25
20
15
10 4 Percentage
5
0
cy st t
Co on en
qua ati em
e on ad
ag
l Ad acti p
gr an
ita s
p Tr
an yU yM
Ca lo
g ilit
te gh no iab
ua Hi ch tL
eq Te se
ad As
In

INTERPRETATION

From the above table and figures show, 40% of employees respond inadequate
capital adequacy is the work force challenges in the banking sector, 28% respond
high transaction cost, 4% respond technology up gradation and 28% on asset
liability management.

49
 Table 4.12 Showing the Features of Bank through Artificial Intelligence

Options Respondents Percentage

Voice Assistance 25 50

Digital Wallets 10 20

Personalization 14 28

Customers Support 1 2

Total 50 100

(Source: Primary Data)

Chart 4.12 Showing the Features of Bank through Artificial Intelligence

Percentage
50
50
45
40
35 28
30 Percentage
25 20
20
15
10
2
5
0
Voice Assistance Digital Wallets Personalization Customers
Support

INTERPRETATION

From the above table and figures shows, 50% of respondents respond voice
assistance is the main feature of AI, 20% respond digital wallets, 28% responds
personalization and 2% on customer support.

50
 Table 4.13 Showing Limitation of AI in Banking Sector

(Source: Primary Data)

Options Respondents Percentage

High Cost 15 30
No Replicating Human 10 20
No Improvement With Experience 5 10
Unemployment 9 18
Others 11 22
Total 50 100

Chart 4.13 Showing Limitation of AI in Banking Sector

Percentage
30
30 22
25 20
18
20
15 10
10
5 Percentage
0
st an ce en
t rs
Co u m ir en m the
gh H pe oy O
Hi ng Ex pl
ti em
ica ith Un
epl t W
R en
No em
ov
pr
Im
No

INTERPRETATION

51
From the above table shows, 30% of employees respond high cost is the limitation
of AI, 20% responds no replicating human, 10% responds no improvement with
experience, 18%respond unemployment and 22% on others

Table 4.14 Showing Opting AI Application in Banking sector

Options Respondents Percentage

Introduce Self Service At Bank 15 30
To Reduce Fraud And Security Risk 12 24
Increase Employee Productivity 8 16
Creating Operational Efficiency 5 10
All Of Them Above 10 20

Total 50 100

(Source: Primary Data)

Chart 4.14 Showing Opting AI Application in Banking sector

Percentage
30
30 24
25 20
16
20
15 10
10
5 Percentage
0
an
k
Ri
sk ity nc
y
ov
e
t B y ctiv cie b
eA rit du ffi A
cu ro lE em
vic Se
eP
a
fT
h
Se
r d on
le f An o ye r ati llO
d pl e A
ceS r au Em Op
du F e g
rt o uce eas atin
In d cr Cr
e
Re In
To

INTERPRETATION

52
From the above table and figures shows, 30% of employees respond introduce self
service at bank is the reason for opting AI in banks, 24%respond to reduce fraud
and security risk, 16% respond increase employee productivity, 10% on creating
operational efficiency and 20% on all of them above.

Table 4.15 Showing the Area where Banks Are Using AI Application

Options Respondents Percentage

Accounting 13 26
Sales 10 20
Merchant Banking 5 10
Physical Security 9 18
Customer Service 13 26
Total 50 100

(Source: Primary Data)

Chart 4.15 Showing the Area where Banks Are Using AI Application

Percentage
30 26 26

25 20
18
20

15 10 Percentage
10

tin
g les kin
g ity ice
n Sa n cur rv
co
u a e Se
tB lS r
Ac an is ca m
e
ch y sto
er Ph Cu
M

INTERPRETATION

53
From the above table and figures shows, 26% of employees respond accounting
area were AI is adopting, 20% responds on sales, 10% responds on merchant
banking, 18% on physical security and 26% on customer service.

5.1 FINDINGS

From the analysis and interpretation of the data and by observation, the following
are the findings and suggestions:
1. 54% of respondents revealed sometimes they are satisfied with banking
services through AI
2. 50% of employees have physical problem through the use of AI technologies
in banking sector.
3. Majority of customers strongly agree that machine power has more efficiency
than man power.
4. 30% of employees responds bank provide off the job training methods to
employees.
5. 46% of employee’s responds they are highly resist the changes in the banking
sector.
6. Majority of employees responds implementing AI in banking sectors is costly.
7. 40% of employees responds the knowledge and skill required to use AI is
technology skill.
8. 40% of employees responds transaction monitoring security is provided
through AI.
9. Majority of employees responds AI chat bots benefit to the bank.
10. 40% of employees responds inadequate capital adequacy is the challenges
faced by bank.
11. Majority of the customer says that voice assistance is the main feature of AI
technology.
12. High cost is the main limitation of AI banking sector.

54
13. 30% of employees responds for introduce self service at bank, bank are opting
the AI technology.
14. For customer service AI technology is mainly used.
15. 40% employees responds transparency were increase by introducing AI in
banking sector.

5.2 SUGGESTIONS

1. To give proper attention towards customer problems.

2. The bank should be more flexible in order to compete with its competitors
like HDFC, ICIC.
3. To arrange some training programs for the employees regarding the product
and the use of AI technology.
4. Data security and privacy need more attention.
5. Due to the intense competition in the banking sector, the Axis bank should
adopt better strategic to attract more customer.
6. The customer problem should be solved on time would add more value to
their assets.

55
 5.3 CONCLUSION

This study helps to know that artificial intelligence has many benefits to
offer for the banking sector. AI is changing business processes and customer
facing services in the banking sector in India. It is also being used to meet
regulatory compliance, detect fraud and asses individual credit worthiness. The AI
has the potential to create more efficient business processes, offer personalised
services and assets in larger goal such as financial institution. There is no doubt the
recent push towards digitalization is rapidly influencing the traditional banking
models. However, it has also exposed the institution to increasing cyber security
threats and vulnerabilities.

56
BOOKS

 Parnas, D.(1985), American scientist. “Artificial intelligence and strategic

defence initiative, page no 437-438.
 Poople, D. Mackworth, A, & Goebel, R. (1998), computational intelligence
and knowledge “computational intelligence: A logical approach page no-
549.
 Smith, C. McGuire, B. Huang, T & yuang, G.(2006), the Turing test “in
history of artificial Intelligence”

WEBSITES

 www.hdfc.com
 www.icic.com
 www.axis.com
 www.yes.com
 https://www.pwc.com/us/en/financial-service/research-insitute/robotic-
process-automation.html
 https://thefinancialbrand.com/67498/artificial-intelligence-ai-banking-trends
 http://explore.financle.com/trends-2018-intelligence

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 QUESTIONNAIRE

Personal profile

Name: .................................................................................

Age:

Less than 30
31-40
41-50
Above 50

Gender:

Male
Female

1. Opinion regarding the satisfaction of employees while using AI?

Highly Satisfied
Satisfied
Neutral
Highly Dissatisfied
Dissatisfied

2. Do you feel AI helps to increase transparency in bank?

Sometimes
Never
Often
Occasionally

58
3. Do you agree with the statement, machine power has more response and
efficiency than man power?

Strongly Agree
Agree
Strongly Disagree
Disagree

4. Do you suffer any physical problem through the use of AI?

Loss of eye sight

Headache
Stress
Others

5. What kind of training methods does the organisation provide to training the
employees?

Off the job training

On the job training
Lecturing
All of them above

6. Response of employees about the changes in the banking system through AI?

Highly resistant
Resistant
Moderately resistant
Susceptible

59
7. What is your opinion about the cost of implementation of AI?

Cost
Affordable
Less cost
Cheap

8. Can the employee cope up with updated developed knowledge and skill to use
AI?

Technology skill
Data entry skill
Strong typing skill
Other skill

9. What are the benefits of AI in banking?

Customer satisfaction
Detecting fraud
Reduce work load
Better decision making
All of them above

10. What kind of security measures were AI provide in the bank?

Transaction monitoring
Mobile number masking
CAPTCHA implementation
Instant alert

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11. What are the various work force challenges faced by Indian banking system?

Inadequate capital adequacy

High cost
Technology up gradation
Asset liability management

12. What are the features available in the bank through AI?

Voice assistance
Digital wallet
Personalization
Customer support

13. What are the limitations of artificial intelligence in banking?

High cost
No replicating human
Unemployment
Other

14. Why banks are opting for AI applications and services?

Introduce self service at bank

To reduce risk and fraud
Creating operational efficiency
All of them above

15. Which are the area banks are using AI application?

Accounting
Sales
Merchant banking
Physical security
Customer services

61