Join Fb group: Career Polit Tor CompeiINEEXAAS follow page: Md. Shafiqul Islam -Shuvo zence (Al) in Banking Sector Artificial intelligence (Al) refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. The goals of artificial intelligence include computer-enhanced learning, reasoning, and perception. Alis being used today across different industries fiom finance to healthcare. Weak Al tends to be simple and single-task oriented, while strong AI catties on tasks that are more complex and human-like. * ees Some critics fear that the extensive use of advanced AI can have a negative effect on society. F AL was a term first coined at Dartmouth College in 1956. Cognitive scientist Marvin Minsky was optimistic about the technology's future. The 1974-1980 saw government funding in the field drop, a period known as "AL winter", when several criticised progress in the field. However, the fervour was revived afterwards in the 1980s when the British government started funding the technology again, especially because they were worried about competition with the Japanese. In 1997, IBM's Deep Blue began the first computer to beat a Russian Grandmaster, making history. ‘Types of Artificial Intelligence > Artificial intelligence can be divided into two different categories: weak and strong, A. Weak artificial intelligence embodies a system designed to carry out one particular job. Weak AI systems include video games such as the chess example from above and personal assistants such as ‘Amazon's Alexa and Apple's Siri. You ask the assistant a question, and it answers it for you. B. Strong artificial intelligence systems are systems that carry on the tasks considered to be human-like ‘These tend to be more complex and complicated systems. They are programmed to handle situations in which they may be required to problem solve without having a person intervene. These kinds of systems can be found in applications like self-driving cars or in hospital operating rooms. > Artificial intelligence also can be categorized into one of four types. i Reactive AI, ii, Limited memory AI, ili, ‘Theory-of-mind Al, iv. Selfaware Al Applications of artificial intelligence in banking industry i. Customer service/engagement (Chathot):Chatbots deliver a very high ROI in cost savings, making, them one of the most commonly used applications of Al across industries. Chatbots can effectively tackle ‘most commonly accessed tasks, such as balance inquiry, accessing mini statements, fund transfers, etc. This helps reduce the load from other channels such as contact centres, internet banking, etc. i, Robo Advice: Automated advice is one of the most controversial topics in the financial services space. A robo-advisor attempts to understand a customer’s financial health by analyzing data shared by them, as well as their financial history. Based on this analysis and goals set by the client, the robo-advisor will be able to give appropriate investment recommendations in a particular product class, even as specific as a specific product or equity. Page 1 of 3Join Fb group: Career Polit Tor CompeiINEEXAAS follow page: Md. Shafiqul Islam -Shuvo General Purpose / Predictive Analytics: One of Al’s most common use cases includes general-purpose semantic and natural language applications and broadly applied predictive analytics. Al can detect specific pattems and correlations in the data, which legacy technology could not previously detect. These patterns could indicate untapped sales opportunities, cross-sell opportunities, or even metrics around operational data, leading to a direct revenue impact. Cybersecurity:AI can significantly improve the effectiveness of cybersecurity systems by leveraging data from previous threats and learning the patterns and indicators that might seem unrelated to predict and prevent attacks. In addition to preventing external threats, Al can also monitor internal threats or breaches and suggest corrective actions, resulting in the prevention of data theft or abuse. Credit Scoring / Direct Lending: Al is instrumental in helping alternate lenders determine the creditworthiness of clients by analyzing data from a wide range of traditional and non-traditional data sources. This helps lenders develop innovative lending systems backed by a robust credit scoring model, even for those individuals or entities with limited credit history. Fraud detection and prevention: One of the most critical applications of artificial intelligence in banking industry is fraud detection and prevention. AI algorithms can analyze large amounts of customer data in real time to identify potential fraudulent activity, such as unusual spending patterns or suspicious ‘transactions. This helps financial institutions to prevent fraudulent activity before it occurs, enhancing security and protecting both customers and the institution. Personalized banking experiences: AI can be used to provide customers with personalized banking experiences. By analyzing customer data, Al algorithms can provide personalized financial advice and product recommendations. This enhances the customer experience by providing services that are tailored to individual needs and preferences, Benefits of artificial intelligence in banking industry ) Improved customer experience through personalization and automation b) Enhanced security through fraud detection and prevention ©) Increased efficiency and cost savings through process automation and optimization. 4) Better decision-making through data analysis and insights Challenges and concerns with artificial intelligence in banking industry Data privacy and security: As financial institutions collect and analyze more data using Al algorithms, the risk of data breaches and cyberattacks increases. This is particularly concerning, given the sensitive nature of financial data. Institutions must implement strong data privacy and security measures to protect both themselves and their customers. Bias and discrimination: AI algorithms are only as unbiased as the data they are trained on. If the data used to train an AT algorithm is biased or discriminatory, the algorithm will produce biased or discriminatory results. Financial institutions must ensure that their AI algorithms are trained on unbiased and diverse data to avoid perpetuating bias and discrimination. Customer trust and transparency: The use of artificial intelligence in banking industry may create a perception of reduced human interaction, which may affect customer trust. Financial institutions must be transparent about their use of Al and provide customers with clear explanations of how Al is being used to provide services. Page 2 of 3Join Fb group: Career Polit Tor CompeiINEEXAAS follow page: Md. Shafiqul Islam -Shuvo Integration with legacy systems: Integrating AI with legacy systems can be challenging, particularly for institutions with complex and fragmented IT systems. Institutions must ensure that their IT infrastructure is capable of supporting the integration of Al and that their employees have the necessary skills to work with AI technology. Future outlook of artificial intelligence in banking industry, > The use of artificial intelligence in banking industry is still in its early stages, and there is a lot of room for growth and innovation, Here are some potential future developments in the use of artificial intelligence in banking industry. 1) Advanced fraud detection and prevention: As Al technology continues to advance, so too will its ability to detect and prevent fraud. Advanced fraud detection algorithms may be able to identify and prevent new types of fraud that were previously undetectable. 2) Increased personalization: As Al algorithms become more sophisticated, they may be able to provide even more personalized banking experiences. This could include personalized investment advice, customized financial planning, and tailored product recommendations. 3) Integration with voice assistants: Voice assistants, such as Amazon's Alexa and Google Home, are ‘becoming increasingly popular in households. It is possible that in the future, AI-powered voice assistants could be integrated with banking services to provide customers with a more convenient and streamlined banking experience. Collaboration with fintech startups The rise of fintech startups has disrupted the traditional banking industry, and many startups are utilizing AI to develop innovative products and services. In the future, we may see more collaborations between financial institutions and fintech startups, resulting in new and innovative uses of artificial intelligence in banking industry. ¥ Al-powered credit scoring and loan underwriting have the potential to increase access to credit for underbanked populations and small businesses. ¥ Alcan help banks improve their operational efficiency by automating repetitive tasks and optimizing resource allocation. Y The use of artificial intelligence in banking industry requires a significant investment in data infrastructure and analytics capabilities, as well as ongoing maintenance and updates. ¥ The use of AI in banking is still in its early stages, and financial institutions must remain flexible and open to experimentation and iteration, ¥ The successful adoption of AI in banking requires a collaborative approach between banks, regulators, and technology providers to ensure the development of ethical and responsible AI systems Examples of Ai ig ChatGPT, Alexa, Siri, Google Assistant and new tools called Emie, Andi and Bard Conclusion In conclusion, the use of artificial intelligence in banking industry offers several benefits, including improved customer experiences, enhanced security, and increased efficiency. However, there are also challenges and concerns that must be addressed to ensure the responsible and ethical use of Al. Page 3 of 3