Sun. Oct 1st, 2023
    The Role of AI in Banking: From Efficiency to Customer Engagement

    In recent years, there have been predictions that artificial intelligence (AI) and robotics would revolutionize the banking industry, leading to significant job losses. However, these predictions have yet to materialize to the extent anticipated. While cost-cutting measures have resulted in a slight reduction in workforce, the impact of AI on global finance employment has been minimal.

    Despite this, financial institutions like Deutsche Bank and HSBC remain optimistic about the potential of AI. They believe that AI can drive efficiency, automation, and enhance customer engagement experiences. For Deutsche Bank, AI is viewed as the “most profound opportunity” to improve operations and streamline processes.

    HSBC also sees AI as a valuable tool for the banking industry. They believe that AI can help consolidate legacy technology and utilize vast amounts of data. Contrary to concerns about regulatory obstacles, HSBC argues that AI can support compliance with regulatory obligations, particularly in combating financial crime.

    Industry experts support these views, highlighting the untapped potential of AI in risk management, compliance, and enterprise functions. Accenture’s experts suggest that large language models are growing at an exponential rate, offering significant potential gains for banks that embrace AI quickly.

    In addition to internal operations, banks are also utilizing AI for customer acquisition. By tailoring promotions and services based on AI-generated customer profiles, banks can provide more personalized experiences to their clients.

    AI also has the potential to revolutionize regulatory intelligence by analyzing global changes to laws and regulations. Consultancy group Capco has developed a tool that can effectively process and identify relevant information from rule books, legislation, guidance, and enforcement materials.

    Banks are also exploring the use of AI in critical areas such as software development and credit risk models. For example, Deutsche Bank is using AI to enhance credit risk models and consider non-financial factors, particularly climate-related risks. HSBC is utilizing AI to combat money laundering, predict cash shortages in ATMs, and conduct risk reviews of commercial banking loans.

    Looking to the future, banks are optimistic about the potential of quantum computing and its impact on AI capabilities. They also see the integration of AI in physical spaces, such as AI-enhanced buildings that recognize and cater to employees’ preferences and needs.

    Overall, while the predictions of massive job losses due to AI in banking have not materialized, the industry recognizes the potential of AI to drive efficiency, enhance customer experiences, and improve risk management and compliance processes.

    Sources: Deutsche Bank, HSBC, Accenture, Capco.