Advanced digital technology has made a significant revolution in the banking sector. After embracing technological advancements, the sector has gotten rid of the never-ending queues and endless paper works to a great extent. Thanks to online banking platforms, now any customer in India can effortlessly transfer funds, analyse spending and apply for loans from anywhere, anytime through various applications quickly. These technologies have enhanced the quality and flexibility of varied services from bank to bank. Almost every bank in the present scenario provides the facility of at least online banking services.

Impact of the open banking system in India

The emergence of an open banking system in India has majorly contributed to transforming traditional banking institutions by opening a wide array of opportunities to partner with 3rd party financial service providers. The acceptance of the United Payments Interface (UPI) all over India is a perfect example of this shift.

Moreover, UPI currently handles almost half of India’s digital financial transactions. The deployment of Artificial Intelligence-integrated UPI has further improved the model that the government has been expanding its access to non-resident Indian in foreign countries, especially in European countries, UAE and Singapore. The wide adoption of chatbots in enquiry, requests for reports etc., has elevated the flexibility of operations. Even some famous Indian banks have started using Natural Language Processing to feel the customer sentiments and develop responses for them accordingly.

The banking industry is flourishing with AI integration touching almost every aspect, from the digital KYC verification process to calculating credit scores. But to satisfy the demands of the customer base accustomed to the convenience of digital tools, the industry needs to deploy more AI tools.

The shift brought by AI

With the advent of immense technological facilities in banking services, customers have started expecting a certain level of customisation. Therefore, in the coming years, there will be a need to restructure traditional banking services and products to match each customer’s unique needs by focusing on them individually. In order to accomplish this, the industry needs to understand the pulse of customers. Their spending pattern and investment portfolios helps the banks to build relevant, personalised messages and enables them to present their products and services across the various platforms. This is when AI comes to the scene. It can deliver value by creating a sole source of truth from an ever-increasing wealth of information within and outside the enterprise.

Few industry players are already leveraging the power of AI in creating experiences beyond their platforms, opening their networks with APIs to eventually grab the consumer’s mind and slowly change their perception of banking services. In addition, another necessity for the conventional method in the banking industry should be replaced by AI is the growing interest to enter the banking space from established players with technical expertise and a profound vision of customer needs. Though AI cannot completely replace the physical branches, the technology will be able to provide smooth access to banking services. In rural areas where customers are more inclined to visit branches rather than trust technologies, these enterprises need to balance technology and human intervention to build trust in their technology and convince them that the technology-based transactions are safe and secure.

The industry should also be capable of resolving issues like cyber-attacks; as technological intervention increases, chances are more to be exposed to data privacy risks. AI’s ability to identify patterns from various customer activities and learn from previous attacks and alert the authorities on the attacks can enhance their authenticity.

The application of AI needs to be followed by a detailed strategy which considers existing processes, systems and infrastructure and requires a clear understanding of what type of AI solutions must be deployed and the ROI that could be expected. Educating employees and spreading awareness among the public on the new technology is another vital element while implementing AI in the banking sector.

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• https://www.financialexpress.com/business/blockchain-how-ai-is-changing-the-narrative-for-digital-banking-in-india-3172346/