RGSA – Revista de Gestão Social e Ambiental

ISSN: 1981-982X
Data de submissão: 07/04/2023
Data de aceite: 03/07/2023
DOI: https://doi.org/10.24857/rgsa.v17n6-012
Organização: Comitê Científico Interinstitucional
Editora Chefe: Christian Luiz da Silva
Avaliação: Double Blind Review pelo SEER/OJS

ARTIFICIAL INTELLIGENCE AND ROBOTICS AND THEIR IMPACT ON THE

PERFORMANCE OF THE WORKFORCE IN THE BANKING SECTOR

M. C. Shibin Tad 1
M. Syed Mohamed 2
S. Fenin Samuel 3
Deepa M. J. 4
ABSTRACT

Objective: This study seeks to investigate the application and impact of Artificial Intelligence (AI) in the Indian
banking sector, specifically its role in optimizing operations and enhancing customer service.

Theoretical Framework: The study is grounded in the perspective that AI, a technology marked by its human-
like intelligence, has transformative potential in diverse sectors, including banking. It is theorized that AI
applications can lead to customer service automation, personalized services, and data-driven decision-making in
banking.

Method: A combination of secondary data sources, including documents, newspapers, news reports, banking
databases, RBI portals, and websites, was utilized. Further, quantitative analysis was conducted on primary data
collected from two hundred banking staff members across different banks in Tamilnadu, India.

Results and Conclusion: The data analysis demonstrates a significant correlation between AI implementation and
improved banking performance. Nonetheless, the Indian banking sector is yet to fully leverage AI and machine
learning capabilities. The study foresees a promising future with AI deployment, offering opportunities for cost
reduction, enhanced customer experience, and financial inclusion.

Implications of the research: Despite challenges such as linguistic diversity, customer trust, and data security,
the research suggests potential partnerships with fintech companies to mitigate these issues. This research thereby
contributes to the understanding of AI's transformative potential in the banking sector and the way forward to
address existing challenges.

Originality/Value: This research offers unique insights into AI's role in reshaping traditional banking practices
and the hurdles to its extensive application in India. It suggests a novel approach of partnerships with fintech
companies to overcome these challenges, adding value to the discourse on AI in banking.

Keywords: Artificial Intelligence, Indian Banking Sector, Digitalization, Fintech Companies, Data Security,
Customer Service.

1
Faculty of Management Studies, Noorul Islam Centre for Higher Education, Kumaracoil, Tamil Nadu, India.
E-mail: shibintad@gmail.com Orcid: https://orcid.org/0000-0001-5835-6489
2
Faculty of Management Studies, Noorul Islam Centre for Higher Education, Kumaracoil, Tamil Nadu, India.
E-mail: syedmohammed1965@gmail.com Orcid: https://orcid.org/0009-0005-6026-6905
3
Conspi Academy of Management Studies, Thiruvananthapuram, Kerala, India. E-mail: feninsml@gmail.com
Orcid: https://orcid.org/0009-0007-5133-750X
4
Department of BBA, Ramapuram Campus, SRM Institute of Science and Technology, Chennai, Tamil Nadu,
India. E-mail: mjdeepa1@gmail.com Orcid: https://orcid.org/0000-0003-4749-6827

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Artificial Intelligence and Robotics and their Impact on the Performance of the Workforce in the Banking Sector
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INTELIGÊNCIA ARTIFICIAL E ROBÓTICA E SEU IMPACTO SOBRE O DESEMPENHO DA

FORÇA DE TRABALHO NO SETOR BANCÁRIO

RESUMO

Objetivo: Este estudo busca investigar a aplicação e o impacto da Inteligência Artificial (IA) no setor bancário
indiano, especificamente seu papel na otimização das operações e no aprimoramento do atendimento ao cliente.

Estrutura teórica: O estudo baseia-se na perspectiva de que a IA, uma tecnologia marcada por sua inteligência
semelhante à humana, tem potencial transformador em diversos setores, incluindo o bancário. Teoriza-se que os
aplicativos de IA podem levar à automação do atendimento ao cliente, aos serviços personalizados e à tomada de
decisões baseadas em dados no setor bancário.

Método: Foi utilizada uma combinação de fontes de dados secundários, incluindo documentos, jornais, relatórios
de notícias, bancos de dados bancários, portais do RBI e sites. Além disso, foi realizada uma análise quantitativa
dos dados primários coletados de duzentos membros da equipe bancária de diferentes bancos em Tamilnadu, na
Índia.

Resultados e conclusões: A análise dos dados demonstra uma correlação significativa entre a implementação da
IA e o melhor desempenho bancário. No entanto, o setor bancário indiano ainda não aproveitou totalmente os
recursos de IA e aprendizado de máquina. O estudo prevê um futuro promissor com a implantação da IA,
oferecendo oportunidades de redução de custos, melhor experiência do cliente e inclusão financeira.

Implicações da pesquisa: Apesar de desafios como diversidade linguística, confiança do cliente e segurança de
dados, a pesquisa sugere possíveis parcerias com empresas de fintech para mitigar esses problemas. Assim, esta
pesquisa contribui para a compreensão do potencial transformador da IA no setor bancário e o caminho a seguir
para enfrentar os desafios existentes.

Originalidade/valor: Esta pesquisa oferece insights exclusivos sobre o papel da IA na reformulação das práticas
bancárias tradicionais e os obstáculos à sua ampla aplicação na Índia. Ela sugere uma nova abordagem de parcerias
com empresas de fintech para superar esses desafios, agregando valor ao discurso sobre IA no setor bancário.

Palavras-chave: Inteligência Artificial, Setor Bancário Indiano, Digitalização, Empresas de Fintech, Segurança
de Dados, Atendimento ao Cliente.

RGSA adota a Licença de Atribuição CC BY do Creative Commons (https://creativecommons.org/licenses/by/4.0/).

1 INTRODUCTION

The advent and evolution of information technology, particularly artificial intelligence

(AI), has sparked transformative changes across multiple sectors globally. The banking industry
has been no exception, with AI technologies heralding a new era of efficiencies and customer-
centric services. The allure of AI lies in its inherent human-like intelligence, which, when
properly harnessed, can significantly streamline banking processes, enable personalized
customer interactions, and foster data-driven decision making.
Since John McCarthy's foundational definition of AI as the engineering and science of
creating intelligent machines, there has been significant interest in its potential. This
technology, with its advanced algorithms and impressive decision-making capabilities, has
already proven its efficacy in certain sectors such as healthcare diagnostics and autonomous
vehicles. The banking sector, though being a late adopter of this technology, is gradually
recognizing the myriad benefits that AI offers.
AI's initial implementation in the banking sector has primarily centered on introducing
customer service chatbots, personalizing services for individuals, and even installing AI-

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powered robots for self-service in banks. However, these applications just touch the surface of
AI's potential. When fully exploited, AI can revolutionize banking operations, making them
more efficient, secure, and tailored to individual customer needs.
In India, the adoption of AI in the banking sector is still nascent but promising. Despite
facing unique challenges such as linguistic diversity, establishing customer trust, and ensuring
data security, Indian banks are exploring opportunities to incorporate AI into their processes.
As the sector seeks to leverage AI's benefits, strategic alliances with fintech companies may
offer a pathway to overcome these hurdles.
However, comprehensive research examining the application and impact of AI in the
Indian banking sector, specifically in optimizing operations and enhancing customer service,
remains scarce. This gap in knowledge presents an opportunity for further investigation.
Therefore, the primary objective of this study is to investigate the application and impact
of AI in the Indian banking sector. The research aims to understand the extent to which AI can
optimize banking operations and enhance customer service, as well as explore potential ways
to overcome existing challenges. This study thereby contributes to both theoretical and practical
understanding of AI's transformative potential in banking, particularly within the context of the
Indian banking industry.
Objectives of the Study:
• Studying the places where banks are using Artificial Intelligence.
• Exploring the ability of AI for delivering successful results to successfully execute
approaches in India's banking industry.
• To review its effect on the banking sector and its customer support and workforce.

2 LITERATURE REVIEW

The human brain's capacity to access knowledge and problem-solving has inspired
researchers to incorporate comparable Intelligence into computers (Shachmurove, 2002).
Because banks serve a significant role in the economic development of the country, successful
implementation of their strategy, using state-of-the-art technology, contributes not just to
everyones own organization but also with the nation's economic system and economic
expansion as a whole, banks must therefore keep up with the rising demands of today's fast-
paced world. (Brauer 2004) alienating its techniques to maintain market stability, attracting
consumers as well as maintaining current clients (Zineldin, 2006), banks are now seeking
several strategies to expand its services (Alam & Khokhar 2006). A system which can behave
as a human can learn languages, execute hard activities, simulate human decision-making,
allow computers to perform activities involving human Intelligence by integrating multiple
models named as computational Intelligence (Russel & Novig, 2003), (Brachman 2006),
(Duch, Swaminathan & Meller 2007).Artificial Intelligence is widely implemented in the
banking sector around the world through its operations, such as accounting, auditing, insurance
area, promoting decision-making by assisting decision-making into the next step to build expert
support. Network and Decision Support System to guide managerial decision-making, thus
adopting a strategic approach. The primary factors facilitating AI in the banking sector are its
potential for low development costs, open-source programs, and transparency. AI is projected
to become the predominant way for banks to communicate with their customers over the next
three years without relying on local banks and physical cheque books. The banking system
develops robotics and AI to serve its new, tech-savvy clients efficiently. AI has a great potential
to understand all financial operations by optimizing investment policies, ability to handle
consumer data that carries risk analysis, limiting money laundering problems, adding value by
minimizing money transaction costs while increasing the precision and accuracy, thus raising
competitiveness, optimizing the consistency of decisions involved at the different management

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level of banking for the improvement of the economy (Kurode 2018). Another analysis showed
that the banking sector's adoption of AI would add up to approx. $1 trillion (Lakshminarayana
et.al. 2019) to India's economy through 2035.
Shabani & Govender (2023). This review of the literature looks at how ethical advice
affects creative behaviour and what those effects are. The theoretical approach focuses on how
leaders shape the organization's culture and the moral side of leadership, showing how
important ethical behaviour is compared to autocratic styles. The study takes a quantitative
approach and uses pre-made questionnaires to collect data from 160 managers, including
middle and senior managers as leaders and low-level managers as workers. The results show
that responsible leadership makes employees more creative, especially when it comes to
exploring ideas, coming up with ideas, and promoting ideas. The review also shows how little
is known about how ethical leadership affects employees' creativity in state-owned businesses
in South Africa and how the need for ethical leadership is growing in response to corporate
governance problems. The study helps these organisations improve their leadership practises
and encourage innovation, which improves their total performance.
Schreiber, Hupffer & Gayer (2022). The goal of this literature study is to find a link,
based on a theoretical analysis, between how advertising affects how people think about being
outdated and how well advertising works. The theoretical framework is made up of two parts.
The first chapter gives some history and explains what Planned Obsolescence is and what its
main types are. Hermeneutic and interpretive methods were chosen for this review, which puts
the work in the field of social sciences. The results show that the idea of "programmed
obsolescence" is backed by changes in human society and behaviour that encourage individual
competition, the weakening of social bonds, and the need for individual validation.

3 METHODOLOGY

The research is concise, and focuses on secondary results. The information is sourced
from different documents, newspapers, news reports, banking databases, RBI portals, and
websites. The report based on banks using AI, whose use in the Indian banking industry takes
a cue from the four largest Indian public sector banks. The comprehensive investigation has
been conducted in order to understand the advantages of using AI to decrease reliance on the
human factor, particularly in banks, also to recognize what the potential consequences that use
AI can be.

4 RESULTS AND DISCUSSION

4.1 Quantitative Analysis

Of the principal data obtained from spotting two hundred banking staffs of some
particular banks around Tamilnadu, the quantitative analysis is conducted here. Also,
responders who have sent full responses are considered for this study, but partial or incomplete
answers were omitted. Both participants are pre-informed about its intention of the analysis for
data collection, and the survey has been comunicated via e-mail subsequently receiving the
requisite approval and details from the particular banks.

4.2 Descriptive Analysis

Descriptive research is primarily used here to present the demographic data of

participant respondents and the general context for this study.

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4.3 Inferential Analysis

For information gathered from the questionnaires for the study report, this section offers
observational statistical results.

Table 1: Correlation Table

Effect of AI on banking performance Pearson Correlation 1
N 200
R1 Pearson Correlation .193**
Sig. (2-tailed) .006
N 200
R2 Pearson Correlation .672**
Sig. (2-tailed) .000
N 200
R3 Pearson Correlation .954**
Sig. (2-tailed) .000
N 200
R4 Pearson Correlation .917**
Sig. (2-tailed) .000
N 200
R5 Pearson Correlation .944**
Sig. (2-tailed) .000
N 200
R6 Pearson Correlation .737**
Sig. (2-tailed) .000
N 200
R7 Pearson Correlation .893**
Sig. (2-tailed) .000
N 200
R8 Pearson Correlation .949**
Sig. (2-tailed) .000
N 200
R9 Pearson Correlation .972**
Sig. (2-tailed) .000
N 200
R10 Pearson Correlation .464**
Sig. (2-tailed) .000
N 200
Source: Prepared by the authors (2023).

When the value of the correlation coefficient is close to 0.01, it is considered significant.
The table's columns labelled R1, R2, R3, R4, R5, R6, R8, R9, and R10 represent reduced service
costs, customer satisfaction, asset management, risk management, ease of service delivery,
fraud detection, security, digitalisation and automation of back-office processes, mass-market
wealth management, and improved automated teller machine efficiency.
Data in table 1 suggests all traits are significant at the 0.01% level of significance. It
was discovered that the regression value for R3 (Asset Management), R8 (Digitization and
Optimization of Back-office Processing), R5 (Easy Services), and R4 (Service Cost Reduction)
was 0.954, 0.949, 0.944, and 0.917, respectively, while R1 ('C') had a regression value of 0.972,
indicating a very strong link with the conditional factor. Although this indicator has the weakest
relationship to customer satisfaction, it nonetheless reveals an increasing preoccupation with
AI. We have used a regression model to analyse the data we have gathered to see how much of
an effect AI technology is having on the banking sector as a whole. Model and ANOVA details
can be found in Tables 2 and 3, respectively.

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Table 2: Model Summary

Model No R R Square Adjusted R Square Std. Error of the Estimate
1 .981a .971 .961 .284
a. Predictors: (Constant), R10, R1, R2, R6, R8, R7, R4, R3, R5, R9
Source: Prepared by the authors (2023).

Table 3: ANOVA Values

Addition of Mean Square
Model df F Sig.
square values
Regression 398.504 39.850 460.058 .000b
10
1 Residual 17.451 189 0.087
415.955 199
Total
Dependent Variable: Effect of AI on banking performance
Predictors: (Constant), R10, R1, R2, R6, R8, R7, R4, R3, R5, R9
Source: Prepared by the authors (2023).

As seen in Tables 2 and 3, the value of R square was calculated to be 0.971, which
indicates that the variance of 97.1 % in the predictor variables can be described combined
regarding the independent factors. It suggests that the implementation of the AI system in the
banking industry can be a factor behind the improved output variables of 97.1 per cent of the
financial sector. The ANOVA analysis mentioned above makes it possible to conclude that the
null hypothesis can be excluded in the regression analysis, since the F value is equal to 460.058,
the square error value is 39.850, and the absolute peak value is 0.000. It's inferred from the
results indicate that the proposed model is suitable.

Table 4: Regression Analysis Coefficients

Standardized
Unstandardized Coefficients
Model Coefficients t Sig.
B Std.Error Beta
(Constant) -.294 .120 -2.442 .020
R1 -.006 .015 -.007 -.378 .697
R2 .004 .032 .004 .087 .937
R3 .285 .065 .236 4.542 .000
R4 .113 .042 .121 2.695 .008
1. R5 .038 .057 .048 .642 .545
R6 -.031 .034 -.025 -.898 .349
R7 .051 .059 .029 .785 .448
R8 .182 .048 .187 3.452 .003
R9 .452 .069 .454 6.845 .000
R10 .000 .009 .003 .042 .985
a. Dependent Variable: Effect of AI on banking performance
Source: Prepared by the authors (2023).

Table 4 offers the coefficient for the regression analysis, and this table was proven to be
extremely important as it helps to state the current dependent variable's dependency on the
independent variables and establish correlations between them. Based on the statistics given in
the table above, it can be inferred that only six variables out of 10 have "Sig.>=0.05," meaning
R1- Customer Satisfaction, R2- Risk Control, R5- Service Ease, R6- Fraud Detection, R7-
Safety, and R10- Improved ATM Performance. It indicates that bank performance is linked to
the banking sector's implementation of AI technology, the introduction of these systems
increases overall network efficiency by increasing service facilities, increasing network
predictability, and manual errors and discrepancies. A public article published by Ghurair,
(2018), suggested that introducing AI would be groundbreaking for banks in the area and

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implementing it would be both a gain and a challenge for the local banking sector in general.
Using AI-powered technologies can continuously improve bank productivity by monitoring
customer activity trends, providing personalized services, minimizing losses, minimizing
banking costs and taking time to closely match consumer demands. cIt may also be proposed
that the use of AI in the banking industry would have a huge effect on bank performance and a
positive influence on system effectiveness.

5 CONCLUSION

This study delves into the transformative potential of Artificial Intelligence (AI) in the
Indian banking sector. By enhancing commercial practices and customer-oriented facilities, AI
has begun to revolutionize traditional banking models in India. The contemporary banking
landscape has witnessed a surge in the incorporation of advanced technologies, including AI,
cloud storage, and blockchain, all aimed at reducing operational costs and boosting efficiency.
Notably, the application of AI in banking holds immense promise for generating more effective
business operations, facilitating personalized services, and promoting broader goals such as
financial inclusion and digital banking. Despite the infancy of AI integration in this sector,
there's an undeniable potential for a seismic shift towards digitization in the banking industry.
Leading Indian banks, such as SBI, HDFC, ICICI, and Axis Bank, have initiated their
AI journey, marking the dawn of an AI revolution in the banking sector. These developments,
although progressive, are just the tip of the iceberg. The real potential of AI lies in creating new
products and services, expanding the customer base, increasing customer satisfaction, and
thereby augmenting the sector's profitability. However, AI integration in the Indian banking
sector is not without its challenges. From language diversity and customer trust to data quality
and privacy concerns, several barriers could impede the successful implementation of AI. One
suggested strategy to navigate these hurdles is forming partnerships with fintech companies and
startups.
From a regulatory perspective, compliance requirements and detailed privacy policies
are essential to prevent potential misuse of personal data. Furthermore, the move towards
digitalization, while enhancing banking structures, also opens them to increased cybersecurity
risks and vulnerabilities. Therefore, while banks experiment with new technologies like
blockchain and automation, they must concurrently devise effective strategies for
cybersecurity.
This study offers a preliminary understanding of AI's role and impact on the Indian
banking sector. However, it has certain limitations, primarily the restriction to banking staff
responses from Tamilnadu, India. Future study could expand the scope to include a larger and
more diverse participant pool from various Indian states. Further study could also explore the
specific aspects of AI application in banking, like risk management, customer relationship
management, and fraud detection, to gain a more comprehensive understanding of AI's
potential. Overall, this study underscores the transformative potential of AI in the Indian
banking sector and advocates for further study and strategic collaborations to fully harness the
power of AI in banking.

SUGGESTION

AI in the Indian banking sector at its initial level. However a broad spectrum of financial
institutions are incorporating AI and block chain internationally in both backend and front
office applications, the extensive usage of these strategies in India has not reach its full
potential. Implementing AI and Machine Learning to data processing and client service
provides the potential for dramatically more personalized and better client experience,

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substantially improved feedback, and back-end process automation. Over than 36 % of

investment banks currently invest on these technologies, and nearly 70 percent say that they
plan to use it in the future. SBI, India's largest public sector bank, embarks on its AI Journey
with 420 million clients. HDFC bank created a chatbot focused on the AI. Even, it deals with
robotic systems in-store. ICICI Bank introduced mobile automation in over 200 business
processes across the bank's various operations. Axis Bank has opened an innovation center
named Think Factory to accelerate the development of the innovative AI technology for the
banking sector. Though the advantages of AI in the banking sector are going through, there is
tremendous room for creating new goods and services and thus growing the customer base,
satisfying clients, thus raising the profit and income of the banking sector.

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