Research Methodology

Name : Shukla Shweta shiv shankar

Enrolment no : 23PG330001

Submit to : Dr Nidhi Nalwaya

 Scaling and Measurement

Introduction: -
The process of measuring something involves giving numbers in
accordance with scientific principles to certain traits, variables,
or occurrences. It is the act of making observations and
documenting the data gathered from them for a study project.
Measurement refers to the data's description. Accuracy,
objectivity, and communication in terms of numbers. When these
are combined, they Actually, the measurement is three.

The measurement technique known as scaling entails creating an

instrument that relates qualitative concepts to quantitative
metrics. The clearest and most basic explanation of scaling was
provided by Stevens. "Assigning objects to scale is the process of
figures based on a guideline. Typically, when scaling, the objects
are text statements. declarations of thought or attitude. A scale
and a response scale are frequently confused by people.
 Levels of Measurement:
the following categories of measurement scales:

a) Nominal Scale
b) Ordinal Scale
c) Interval Scale
d) Ratio Scale

 Nominal Scale:
The nominal scale, also known as dummy coding, categorizes
individuals, things, perspectives, etc. according to a shared
characteristic. Certain types of data, like males versus females,
white versus black versus blue, and Americans versus Asian
Analysis of Variance and other similar analyses are based on the
nominal scale. Those analyses necessitate the comparison of a
certain category with at least one other. A nominal scale is used
in AI under Banking Sector.

AI is a potent tool that banks can use to maintain their

competitiveness in the fast-paced world of today. Banks can
enhance customer services, cut expenses, and streamline
operations by utilizing AI.

Parameter of use of AI under Banking Sector :

 Banks and financial institutions stand to benefit from AI to
improve overall customer experience, take more informed
decision credit underwriting, defect fraud and default early,
improve collections or increase employee efficiency.

To arrive at logical conclusions, the banking industry requires

certain parameters, including capital adequacy, asset quality,
management efficiency, earning potential, and liquidity.

Dealing with people is still preferred by most. Excellent

customer service is the main factor that keeps consumers
coming back to banks and other financial institutions.Not only
is software expensive, but cutting-edge AI technology is
frequently also more expensive.

Artificial intelligence is still incapable of making moral

decisions, despite its ability to learn and advance. The worry
that AI will eventually replace or even take over humans is
persistent. Artificial intelligence requires extremely high
production and maintenance costs due to its complex
machinery.

Satisfaction of use AI under Banking Sector: -

AI technologies are also essential for enhancing the user
experience that patrons have at ATMs. The combination of text-
to-speech and speech recognition technology can make
transactions easier for customers to understand and more
convenient. For users who would rather not use their hands, or
who have impairments, the ability to speak with the ATM via
voice commands can expedite and streamline the process.
Furthermore, text-to-speech technology can facilitate menu
navigation and transaction completion for clients who are
visually impaired. This can therefore result in a rise in consumer
loyalty, brand awareness, and eventually bank revenue.

AI can assist banks in responding to consumer requests and

questions via email and voice assistant more quickly, accurately,
and consistently.AI can assist banks in comprehending the
opinions and sentiment of their clients.AI can assist clients with
account setup, identity verification, onboarding, and product
recommendations.

Awareness of AI under Banking Sector:-

AI for corporate banking maximizes investment, forecasts market
trends, automates tasks, and improves customer service by
detecting defect frauds. This results in increased productivity,
decreased costs, and more personalized services.

Due in large part to the majority of financial operations being

digitalized through the use of AI algorithms, the banking industry
has been able to capture the perceptions of its customers. Thus,
it is crucial to comprehend the extent of customer awareness
regarding the application and capabilities of AI technologies.
Factors influencing customers' perceptions include their ideas
and opinions of financial entities.
  Impact of ARTIFICIAL INTELLIGENCE in banking
opportunities and challenges
Artificial intelligence has been a buzzword in the financial
industry for a few years now. Banks are leveraging the power of
AI to enhance their operations, provide personalized customer
experience, and improve fraud detection.

However, as with any new technology, AI also presents challenges

for the banking industry.

The use of AI can raise regulatory concerns, such as the use of

unexplainable AI algorithms. AI system can be vulnerable to
cyber attacks and banks must important robust cybersecurity
measures to prevent breaches.

Here, we will explore the opportunities and challenges of AI in

banking.

 Opportunities of AI in banking.
Personalized customer experiences:

Ai can help banks offer customized experiences to their

customers. with the help of data analytics, banks can
understand their customer’s preferences, financial behaviour and
life events to offer personalized financial solutions. This can lead
to higher customer satisfaction and loyalty.
 Improved fraud detection:

AI can analyse vast amounts of data to detect fraudulent

transactions more efficiently than humans. Machine learning
algorithms can learn from past fraud cases to identify patterns
and anomalies that can be used to prevent future fraud.

Operational efficiently:

AI can automate routine tasks and streamline operations,

resulting in cost savings and increased efficiency. For example,
chatbots can be used to handle customer queries, freeing up
employees to focus on more complex tasks.

Risk management:

AI can assist banks in managing risk by predicting credit

defaults, assessing creditworthiness and monitoring market
trends.

Challenges of AI in Banking

Data privacy and Security:

Banks collect vast amounts of customer data and AI algorithms

require access to this data to function effectively. Ensuring data
privacy and security is critical to prevent data breaches and
protecting customer’s confidential information.
Ethical considerations:

The use of AI raises ethical concerns, such as bias in decision-

making and job displacement. Banks must ensure that their AI
systems are transparent, fair and unbiased.

Regulatory compliance:

Banks are subject to strict regulations and compliance

requirements.

The use of AI can raise regulatory concerns, such as the use of

unexplainable AI algorithms.

Cyber-security risks:

AI systems can be vulnerable to cyber-attacks and banks must

implement robust cyber-security measured to prevent breaches.

Conclusion:
AI presents exciting opportunities for the banking industry, but it
also poses significant challenges. Banks must carefully consider
the ethical, regulatory and security implications of AI adoption to
ensure that they leverage the technology effectively and
responsibly. By doing so, banks can provide better customer
experiences, streamline, operations and manage risk more
effectively. The key to successful AI adoption in banking is to
strike the right balance between innovation and risk
management.
 Review of literature

1. Milojevic, N., S.,

As per the research paper Ai and Machine learning has become

impactful in banking risk management after the global financial crisis.
Main focus in this paper is on credit risk management. As a result it can
be find that application of Ai, machine learning, deep learning, and big
data analytics can have further positive impact on financial sector. The
paper could have a positive influence on future similar academic
research of risk management.

Milojević, N. and Redzepagic, S., 2021. Prospects of artificial intelligence

and machine learning application in banking risk management. Journal
of Central Banking Theory and Practice, 10(3), pp.41-57.

2. Gautam, N.,

As per this research paper The banking industry is now in a new phase
of innovation due to recent technological advancements.. The banking
industry's growing needs in a number of areas, including client retention,
fraud detection, loan computations, insurance, risk management, etc.,
have been met by the latest advancements and improvements in
computational intelligence. As a result This paper examines applications
in the banking sector that leverage big data analytics, machine learning,
and artificial intelligence to provide a range of financial solutions.
Gautam, N., 2021. Applications of AI and Machine Learning in Banking
Solutions. Grenze International Journal of Engineering & Technology
(GIJET), 7(1).

3. Leo, M., Sharma, K.,

In order to identify areas or problems in risk management that have not

been sufficiently explored and may benefit from additional research, this
paper reviews the literature in order to analyze and evaluate machine-
learning techniques that have been studied in the context of banking
risk management. By examining the numerous issues pertaining to risk
management and machine learning in banks, the methodological
framework for this study was established. The results has demonstrated
the exploration of the use of machine learning in the management of
banking risks, including credit, market, operational, and liquidity risk.

Leo, M., Sharma, S. and Maddulety, K., 2019.

Machine learning in banking risk management: A
literature review. Risks, 7(1), p.29.

4. Donepudi, P. K.,

In this research paper Applications of artificial intelligence and machine

learning have been flourishing in the financial industry recently. We have
seen that, by utilizing its decision-making powers, computational
intelligence is the most valuable enabler to gain a competitive advantage.
It is reasonable to argue that machine learning (ML) and artificial
intelligence (A.I.) have revolutionized the global banking and financial
services. Notably, a major factor in the change we are witnessing is the
expansion of fintech companies. In results We can confidently state that
AI and ML technologies are dominating the banking industry, and it
doesn't appear that we will be able to stop them.

Donepudi, P.K., 2017. Machine learning and artificial intelligence in

banking. Engineering International, 5(2), pp.83-86.

5. Hassani, H. X.,

As per this research paper The banking industry, which is rapidly

growing and has a wealth of data, has emerged as the field in which
these rapidly changing technologies are being implemented. Data-driven
technologies have revolutionized every aspect of human life. To the best
of our knowledge, no thorough literature review has been done that
particularly addresses deep learning and how it is being used in
banking. As a result, this work adds to the body of literature by
thoroughly examining deep learning technology and summarizing its
pertinent banking applications.

Hassani, H., Huang, X., Silva, E. and Ghodsi, M., 2020. Deep learning
and implementations in banking. Annals of Data Science, 7, pp.433-446.

6. Agarwal, P.,

As per this paper Applications for computational intelligence in banking

and finance have recently been developed and implemented, providing
business solutions for both front-end and back-end processes to create
exceptional customer experience and efficiency. applications of AI and
assess its usefulness in various financial industry functional areas, with
a primary focus on automating banking processes and improving
customer interaction. As a result The study culminates with an
examination of the ways in which banking and financial institutions
utilize computational intelligence to enhance their operations and shape
their surroundings.

Agarwal, P., 2019, March. Redefining banking and financial industry

through the application of computational intelligence. In 2019 Advances
in Science and Engineering Technology International Conferences
(ASET) (pp. 1-5). IEEE.
 7. Yu, T,R., and X.,

About this paper Artificial Intelligence (AI) and big data help businesses
make decisions. They assist businesses in developing fresh goods and
procedures or enhancing current ones. AI is expected to have enormous
potential for banks as data volume increases exponentially and costs for
computing power and data storage decrease. As a result they talk about how
AI and big data may affect oversight and compliance with regulations.
Finally, they wrap up by discussing the restrictions and difficulties
associated with using big data-driven artificial intelligence.

Yu, T.R. and Song, X., 2021. Big Data and Artificial Intelligence in the
Banking Industry. In Handbook of Financial Econometrics, Mathematics,
Statistics, and Machine learning (pp. 4025-4041).
8. Kochhar, K, Purohit.,

In this research paper the purpose of assessment moderation is to

guarantee uniformity in grading among instructors, courses, and programs.
Many academicians in the tertiary education setting have consistently
expressed concern about the challenges associated with achieving
consistency. The emphasis of this paper is on continuous quality
improvement in higher education because universities give significant
latitude for local adaptation and discretion (Weick, 1995). As a result there
is a power problem with second marking, particularly with novice faculty
members who frequently accept the first markers' ratings when they
moderate or are moderated.

Kochhar, K., Purohit, H. and Chutani, R., 2019. The rise of artificial
intelligence in banking sector. In The 5th International Conference on
Educational Research and Practice (ICERP) 2019 (p. 127).

9. Noreen, U., Shafique,

This Research paper includes Artificial intelligence, or the simulation of

human intelligence in machines, has grown and is significant in the new
banking era. The current study intends to explore Asian consumers'
opinions regarding the use of artificial intelligence. The findings indicated
that the intention to use artificial intelligence (AI) in the banking industry
was significantly and favorably correlated with the following factors:
awareness, attitude, subjective norms, perceived usefulness, and knowledge
of AI technology. In order to enhance customer service and spur overall
growth through increased revenue, the banking industry also places a
strong emphasis on cutting-edge AI technologies.

Noreen, U., Shafique, A., Ahmed, Z. and Ashfaq, M., 2023. Banking 4.0:
Artificial intelligence (AI) in banking industry & consumer’s
perspective. Sustainability, 15(4), p.3682.
10. Caron, M. S.,

In order to better assess the development, deployment, and scaling of

sophisticated algorithms, this paper seeks to raise awareness and offer
additional guidance for banks' corporate governance and national policy-
making. Inauthentic knowledge (AI). Key considerations and pertinent
challenges are evaluated. AI offers towards the banking sector. It explains
different legal instruments with different outcomes, like strict regulations or
voluntary standards of behavior. As a result The study emphasizes how
critical it is to support innovation while maintaining the confidence of
financial customers and providing sufficient privacy and human rights
protection.

Caron, M.S., 2019. The transformative effect of AI on the banking

industry. Banking & Finance Law Review, 34(2), pp.169-214.

11. Kaur, D. N.,

In this research paper the simulation of human intelligence in machines is

known as artificial intelligence (AI), sometimes referred to as machine
intelligence. It is the intelligence that machines display as opposed to the
innate knowledge that people exhibit. AI is developing quickly, from self-
driving cars to Siri. Several industries, including banking, have been
completely overtaken by artificial intelligence. Understanding the impact of
artificial intelligence (AI) on modern banking was the main idea behind this
investing. This study primarily focuses on the idea of artificial intelligence
(AI) in the banking industry, how it has drastically changed banking, and
how it affects human labour.

Kaur, D.N., Sahdev, S.L., Sharma, D.M. and Siddiqui, L., 2020. Banking
4.0:‘the influence of artificial intelligence on the banking industry & how ai
is changing the face of modern day banks’. International Journal of
Management, 11(6).
12. Thowfeek, M. H.,

As per the paper for the past few years, researchers have been interested in
the topic of artificial intelligence (AI). Thanks to recent technological
advancements and faster data accessibility, it is now closer to commercial
use. They have sparked significant advancements in a variety of fields, such
as crowdfunding, payments, wealth management, and lending [11] in
addition to Solid State Technology. As a result Prior to the trained
algorithms reaching the point where the AI applications can run without
human involvement or moral hesitations, AI-oriented role models and
process capabilities were found to be crucial.

Thowfeek, M.H., Samsudeen, S.N. and Sanjeetha, M.B.F., 2020. Drivers of

artificial intelligence in banking service sectors. Solid State
Technology, 63(5), pp.6400-6411.

13. Uma Maheswari , S. A.,

As per research every day, banks interact with a wide range of customers
and continue to use outdated technology. Modern advancements in
technology have made it possible to automate almost every process, from the
start of production to the end, so outdated financial management
institutions need to undergo a revolution. The use of modern virtual
assistants and AI system mastering technology can involve banks working
together. As a result Artificial intelligence-powered virtual assistants
improve business process performance across the board, but especially in
the banking sector, where they make processes more dependable, quick,
and human-free.

Uma Maheswari , S. and Valarmathi, A., 2023. Role of Artificial Intelligence

in The Banking Sector. Journal of Survey in Fisheries Sciences, 10(4S),
pp.2841-2849.
14. Huang, J., Chai.

In this research paper An advanced machine learning (ML) method based on

artificial neural network (NN) algorithms is called deep learning (DL). a
thorough assessment of the model preprocessing, input data, and model
evaluation is provided by the literature on the use of deep learning models in
the major banking and finance domains. As a result this study offers
guidance and understanding on the state-of-the-art for applying deep
learning models in banking and finance to scholars and practitioners.

Huang, J., Chai, J. and Cho, S., 2020. Deep learning in finance and
banking: A literature review and classification. Frontiers of Business
Research in China, 14(1), pp.1-24.

15. Lee, I. and Y. J.,

In this research it is anticipated that machine learning will spread

throughout more industries as it becomes an indispensable component of
business operations. In this era of unparalleled technological advancement,
it is acknowledged as one of the most significant application areas, and its
adoption is picking up speed in practically every industry. then talk about
the trade-off between machine-learning algorithms' accuracy and
interpretability, which is an important factor to take into account when
choosing the best algorithm for the job at hand. At last they delve into the
difficulties that all managers face when implementing machine-learning
apps.

Lee, I. and Shin, Y.J., 2020. Machine learning for enterprises: Applications,
algorithm selection, and challenges. Business Horizons, 63(2), pp.157-170.
Questionnaire on use of AI and ML in banking sector