Building your bank’s AI roadmap? Here’s what to consider

Whether it’s chatbots that answer account balance questions or automated systems that swiftly analyze billions of data points to detect fraud, more banks are integrating artificial intelligence (AI) into their operations.

The use of AI in banking continues to grow. Today, 91% of financial institutions said they either use AI or are assessing the technology for future implementation. The emergence of generative AI — a form of AI that generates new content from text, images and other data sources — gives banks more opportunities to improve the customer experience through automation and forward-looking insights. More than 80% of banks plan to adopt generative AI by 2026, according to the research firm Gartner.

But for banks to unlock AI’s full potential, they have to balance integration with responsible use.

How is AI used in banking today?

How is AI used in banking to transform customer service and drive operational efficiencies? Banks are harnessing AI for several purposes, including loan processing, fraud detection and prevention, and enabling customer self-service. But there are several areas where AI could have the biggest impact in banking:

• Hyper-personalization: Customers can opt in to allow AI to analyze their data and help banks deliver personalized financial solutions and tailored products, such as a 529 college savings plan to a customer whose transaction history indicates they’re a new parent.
• Predictive banking: With AI, banks can proactively meet customer needs with customized recommendations and financial advice, whether through investment guidance based on a customer’s risk tolerance or tools that analyze a customer’s spending patterns to provide personalized budgeting advice. Predictive banking could also drive more cross-selling and upselling opportunities — a win-win for banks and their customers.
• Empathetic customer service: Emotional AI could become more common in banking. Banks could use AI-driven voice analysis to assess customers’ tone and inflection during customer service conversations, integrate facial recognition technology into their apps for identity verification to deliver a contactless experience.
• Supercharging back-end operations: AI could advance the automation of administrative processes, such as application reviews and intelligent data extraction from handwritten documents. It also could help banks reduce human errors that can lead to service delays or application denials that hinder financial inclusion for some customers.

Go-forward AI implementation plan for banks

Before banks can realize these benefits, they must have a carefully thought-out AI implementation plan. Here are some things to consider.

Monitor regulatory shifts

The regulatory landscape is quickly evolving to catch up to AI’s growing use in business. States have proposed more than 500 AI bills, some of which have passed. However, there’s no comprehensive federal AI law. Banks must keep up with changing compliance rules and develop internal monitoring guidelines to align with evolving AI regulations.

Establish a responsible AI governance policy

Banks should also establish guidelines for responsible AI use. AI comes with certain risks, such as hallucinations that misrepresent data, data bias that could unwittingly contribute to unfair lending practices, and external security risks associated with third-party tools.

To combat these risks, banks can create a responsible AI program that encompasses privacy and security controls, data handling policies, mechanisms that ensure the use of inclusive datasets in AI tools, and bias audits for AI models.

Create an AI center of excellence

Banks can also consider creating a dedicated team responsible for developing and executing their AI strategy. This team should include cross-functional stakeholders to ensure strategic alignment. With an AI center of excellence, banks can also streamline knowledge-sharing and training to create a more AI-literate workforce, improve risk management, and accelerate AI-driven transformation in ways that benefit customers and employees alike.

Build better banking with AI

In banking, AI is a powerful technology that can drive automation, advance financial inclusion, and improve the customer and employee experience — as long as banks deploy it responsibly. By developing a responsible AI strategy that prioritizes fairness, accountability, and transparency, as well as accessibility and compliance, banks can fully capitalize on this technology to drive business innovation and better serve customers.

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