Banks have made AI headway but there's a long way to go, say experts

While the banking sector has been experimenting with artificial intelligence (AI) for some time now, there is a long, and imperative, path ahead before the sector fully leverages the new technology, top industry experts said at the 16th Mint Annual BFSI Summit and Awards. Banks will have to work on unlocking their data and recruiting in house talent rather than relying on outsourcing if they want to fully leverage AI, experts said.

“Most of the banks in India at least have built a fairly good amount of capabilities on the traditional AI front and have at least a few set of use cases that are already implemented," said Vipin V., managing director and partner, . “There are use cases starting from prospecting of a customer to sales to credit underwriting to then monitoring and the collections part of it," he said.

Even less mature banks have AI for underwriting, he added. While there is a long way to go for many banks to implement AI use case across their value chain, they are at a good starting point, he said. Ramesh Lakshminarayanan, the CIO and Group Head IT at HDFC Bank, said that there are also very interesting use cases for general AI, especially in customer care.

“I think handing over the prompt to the customer is a very important decision. For example, can statements queries be handed over to customers? Why would you try and download your statements and then go to 10 different entries to figure out transactions on a particular day or location?" he said, adding that the process can be seamlessly handled by AI.

Other tasks that AI can take over include banking over chat applications like WhatsApp using generative AI, or ancillary activities like writing credit access memos and legal documents, he said. Pranav Arora, the MD and Lead Applied Intelligence at Accenture in India agreed with the applications that AI can find in customer care.

“Ninety percent of us get very poor RM (relationship manager) experience (at banks). The RMs are not able to answer any second level nuanced questions. I think banks adopting Gen AI will change that. There is massive opportunity here," he said. Another use case for AI has been in fraud detection, according to Shiv Bhasin, chief transformation officer, IndusInd Bank.

“One of the oldest use cases (of AI) has been in fraud management, especially in the transaction fraud area. There have been neural network based AI models in place for analysing various behavioural aspects and then making real time or near real time decisions," he said. Banks are cognizant of the importance of AI and are investing in the right talent to build in house capabilities, said Milind Nagnur, group president & chief technology officer, Kotak Mahindra Bank.

“It is going to be very hard for any bank, big or small, to simply treat IT as something that can be outsourced to some vendors and imagine that things will work just fine," he said. “Our biggest investment is in tech talent right now." Banks are scouting for talent from tech companies, top Silicon Valley firms like Google and Facebook, from financial institutions and from FinTech companies, he said.

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