In the past few years, the banking industry has transformed dramatically. The introduction of artificial intelligence and machine learning has helped banks better analyze data and spot trends faster than ever.
In addition, AI has also made it easier for businesses to increase customer satisfaction by providing them with personalized services that meet their needs at any given moment.
JP Morgan is one of the first companies that fully grasped this concept and invested heavily in AI development. It has devoted 50 percent of its $11 billion annual technology budget to research emerging technologies, such as AI, which will be used for various tasks, such as identifying cyberattacks, finding new ways to invest money, etc.
In this article, we will discuss how machine learning is transforming the banking industry and what exactly artificial intelligence is.
What Is AI Or Machine Learning?
Artificial Intelligence (AI) is a field of computer science where scientists focus on making computers perform tasks that humans do. Machine Learning (ML) aims to program machines to learn by themselves and improve their performance with experience.
The current trend in AI development is to create AI-informed decisions. Basically, it is a decision-making process in which AI provides the human input with a set of options and helps determine the best option. This kind of development augments human intelligence rather than taking over any robotic responsibilities.
This technology also consumes fewer resources, making it less expensive than traditional systems while still delivering results at lightning speed.
Role of Artificial Intelligence In The Banking Industry
The banking industry has been transformed over the last few years due to AI and machine learning technologies. Banks have started using these new methods for all kinds of processes, such as fraud detection, customer service, or cyber-security.
This helps them adapt more quickly to changes in technology and meet customers’ needs better than ever before.
One of the best examples to showcase the role of machine learning in banks is loan approval. Back when banks had only human decision-makers, they would rely on a client’s history and often make mistakes with their decisions. This would often lead to denied loans or, worse yet, denying someone credit at all.
Machine learning has made life so much easier because it takes some guesswork from these assessments, which helps expedite the process without compromising accuracy.
Prevent Fraudulent Activities
The banking industry is a highly regulated and controlled marketplace. Therefore, banks are forced to comply with strict government regulations to prevent defaulting or fraud.
The traditional process for banks to protect their customers from fraudulent activity exposes them to protocols that are often prone to violation by external threats.
With the advent of AI, banks are now working with machines instead of humans. This allows them to protect customers from fraudulent activities and perform high-level analysis in real-time.
A chatbot is a form of AI software that is making waves in the banking industry. It can be programmed to carry on an engaging conversation and provide answers, information, or service requests like humans do.
Chatbot technology is playing a vital role in how financial institutions serve customers with large-scale issues that require quick responses from customer service representatives or automated systems.
A recent study found that over 80% of consumers would be more likely to deal with banks if they were using conversational interfaces instead when seeking information about accounts and services.
Tasks, such as recording transactions, are the hardest for any bank due to the staggering amount of data generated. The volume poses challenges in its collection and registration by employees, who must then use this data to serve clients’ needs.
However, determining how these records will be used is complicated because there may already exist thousands upon millions within one company’s clientele base alone.
Gone are the days when banks offered just one option to clients. Now, they’re implementing innovative business ideas and risk management solutions by harnessing the power of technology. AI is used to collect data from countless transactions and provide personalized services to customers.
JPMorgan Investments In Artificial Intelligence
Artificial intelligence has transformed how the banking industry operates.
JP Morgan Chase & Co., one of America’s largest investment banks and financial service providers, is considering investing $20 billion over the next decade to develop various applications using technologies, such as Artificial Intelligence (AI), Machine Learning (ML), etc.
The company’s CEO has said it invests in AI and machine learning since it is the “defining technology of our age.”
JP Morgan has also established an internal ‘Investment Management Science and Engineering’ organization with a dedicated workforce to focus on AI technology. The company is trying to speed up its efforts in this area, as they are already late to the game when investing in machine learning technologies.
This move will help them stay ahead of other competitors, including Goldman Sachs Group Inc., Citigroup Inc., Bank of America Corp., and Barclays. JP Morgan has already started working with start-ups like Digital Reasoning Systems LLC, Beyond Verbal Communication SA, etc., that utilize cognitive computing analytical capabilities to support their business operations.
They have not revealed any specific details about their plans, but sources say that JP Morgan will be using machine learning tools for analyzing structured and unstructured financial information. This includes market research reports, news articles, etc., which helps investment managers make well-informed decisions regarding investments.
The Future Is AI
The AI revolution is coming to banking, and it’s going to change how we do business. From chatbots that can answer customer service questions to algorithms making investment decisions, we see a lot more automation in finance than ever before.
To stay competitive in a world where technology is constantly changing, banks need to adapt quickly. This means investing heavily in artificial intelligence solutions to provide innovative services while still maintaining profitability.