The use of artificial intelligence tools has escalated recently in all sectors of the economy owing, among other factors, to the growing volume of digital data and higher computational capacity. Major benefits may be reaped from applying these tools to the provision of financial services, not only for financial institutions but also for society as a whole. 

Artificial intelligence tools can provide major benefits, allowing certain tasks to be automated and boosting analytical capacity compared with traditional techniques. However, they also present a series of limitations that can make them unsuitable for certain activities and a set of risks that must be managed appropriately. 

Jewandah S, in her research paper "How Artificial Intelligence is Changing the banking sector - A case study of top four Commercial Indian Banks", states that the banking sector in India is discovering the ways through which AI can be incorporated which improve the working of banks and improve customer service in the near future. 

With INDIAai, Dharmarajan Sankara Subrahmanian, Founder-CEO of Impactsure, a financial services company based in Mumbai, analyzed the role of AI in the ever-changing banking sector.  

(From left to right) Subramaniyan Neelakandan (CTO), Dharmarajan Sankara Subrahmanian (CEO) and Ashish Mohan Jha (COO) of Impactsure.

AI in banking 

Retail banking in India has witnessed a massive transformation in recent times. However, according to Dharmarajan, most corporate banking work is still manually undertaken.  

A study by the Journal of Internet Banking and Commerce states that robots will likely perform 45% of manufacturing tasks by 2025 (v/s 10% today). Merrill Lynch estimated the robots and AI solution market at US$153b by 2020. Machine learning and customer interfaces such as voice and facial recognition will bring a huge change in the banking and financial industry. 

Impactsure is a company that brings this perspective to light in an Indian context. The company uses AI/ML and other emerging technologies wherever there is a manual mode of document analysis. Through this process, Impactsure aids its clients in improving operational efficiency and customer experience with the help of AI. 

"Verification, information extraction and scrutinizing heaps of documents takes lots of time in corporate banking", said Dharmarajan in a conversation with INDIAai. Impactsure uses AI to automate this time-consuming process.  

Here are some use cases 

Bank guarantees are contracts which confirm the involvement of customers in various bank activities. Normally, it takes about four to five working days for the bank to prepare the bank guarantee. However, with AI, the system takes approximately five to seven minutes to prepare the document after human intervention. Also, the documents produced are free of fallacies. 

"We found a sweet spot to enter in the corporate banking sector", said Dharmarajan speaking about Impactsure solutions. "As of now, there are very few Indian players in the corporate banking sector. We have a core AI engine and four sub-platforms. Moreover, hundreds of microservices created for smooth functioning make our propositions unique from other solutions in the market". 

The banks cannot afford to wait to get on their artificial intelligence journey as they have to compete in a future packed with innovative and advanced technology. There are numerous other use cases in banking where AI has a significant role. These include drive-thru banking, bank stations, passbook-updating kiosk, chatbots, CDMs and ATMs, AI algorithms for fraud detection and many more.  

Top banks in India, like SBI, have already implemented many of these sectors in their banking facilities. And players like Impactsure aid our national and regional banks in staying updated in the AI race. 

Generative AI in financial services 

Financial transactions, such as payments between individuals and institutions, are ubiquitous data in large financial institutions, peer-to-peer payment services and online marketplaces.  

"Thanks to ChatGPT, there is a sudden prominence in the AI sector. But it has been there for quite some time", said Dharmarajan speaking about the role of generative AI in financial services.  

According to the founder, though the concept of generative AI is old, the way it is adopted is new. Technology is going to be evolving every day. He stated that with this emergence, the value proposition would change, and people would need new skill sets despite their field of choice.  

Also, routine, mundane activities will be taken over by technology faster. Dharmarajan opines that it is vital for workers to understand technological advancements to stay updated in the market. "It is just like the time when computers were invented", he stated. 

Overcoming challenges and responsible adoption 

Though emerging technology is transforming the banking sector from every end, the responsible implication of AI is still under research. The Alan Turing Institute identified the key challenges of AI in this field. These include issues pertaining to data quality, non-intuitiveness, adaptability, the structure of technology and supply chain, legal and regulatory compliance and many more.  

Effective use of technology has a multiplier effect on the growth and development of banks. Hence with the introduction of artificial intelligence, more customers are attracted, and it is helping the banks to grow more. In addition, banks can apply AI to improve the client experience by empowering frictionless, round-the-clock client association - however, AI in banking applications isn't simply restricted to retail banking services. The back and middle office of investment banking and all other money-related supervision are gained by AI. 

Impactsure is currently expanding its clientele to the middle east and Southeast Asia. They have also partnered with key players in the sector. The company is also revamping their AI solutions which were banking-focused on corporate and other enterprises.