The Transformative Impact of AI in Finance and Banking

Abstract

Davis Dorran Douglas

The transformative impact of artificial intelligence (AI) in finance and banking is pro7 found, revolutionizing the way financial institutions operate, interact with customers, and make 8 decisions. This article explores the technological landscape that has paved the way for AI adoption, including falling data storage costs, data availability, advancements in machine learning, cost reduction, regulatory compliance, competitive advantage, risk management, customer experience, fraud detection, increased connectivity, and rapid advances in AI technologies. It discusses how AI is enhancing customer support, improving security through fraud detection algorithms, and enhancing credit scoring accuracy through machine learning. The value creation potential of AI in banking includes unlocking up to $1 trillion of incremental value annually through personalized services, cost reduction via automation, and uncovering new opportunities. Additionally, it provides examples of AI applications in banking, including personalization, automation, and insight extraction, showcasing how AI is transforming the industry. Despite these advancements, the article acknowledges challenges such as a lack of clear strategy, legacy systems, and fragmented data assets and proposes solutions like promoting a growth mindset and responsible AI deployment. It also addresses current issues in the banking sector, such as cyberattacks, voice cloning, and fraud, emphasizing the importance of AI in addressing these challenges. Overall, the article highlights the transformative potential of AI in finance and banking, urging banks to embrace an AI-first mindset for sustained growth and innovation.

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