Page 34 - Banking Finance August 2022

ARTICLE

adopting new technology to help serve a much higher industry is a critical backbone for India's economic
number of consumers through digital channels that ever development. Adoption of AI by banks will help them scale
before, the role of chatbots in banking for the coming years and improve access. It will also aid banks in achieving better
will be significant and ever expanding. Banks have been performance, higher profitability and reduction in risk. Data-
utilizing chatbots to help handle routine tasks like resetting driven decision-making using chatbots can help banks lend
a mobile banking password, transfer funds between to priority sectors, increase client base and develop products
accounts, pay bills or even open a new checking account. that are suited to customer needs.
As technology advances and as the recent consumer
adoption of this technology continues to progress, chatbots Chatbots can be deployed in banks across a range of
in banking will evolve to be capable of handling far more functions for improving overall customer experience, making
complex tasks, such as helping a customer get pre-approved more informed decisions on credit underwriting, detecting
for loan origination. frauds and defaults early, improving collections and
increasing employee efficiency. There are some challenges
Most importantly, chatbots in banking will eventually that need to be addressed to increase the adoption of
become much more advanced in their ability to connect with chatbots in the Indian banking and finance industry. These
the consumer on a more human level, turning interactions include training existing manpower in new skills; making the
that have traditionally been very transactional into an current banking processes adaptable with AI; increasing the
experience that would be closer to the real life. People still capacity of customers to use chatbots systems; and ensuring
want to bank with people, even if that communication takes data protection and privacy.
place digitally. The future of enhanced customer experience
will be a mix of serving customers both in-person and Banks and financial institutions stand to gain from the
virtually. adoption of chatbots. It can lead to better risk management
in these institutions, thereby improving their growth
Way Forward potential. Furthermore, chatbots can help banks adapt to
the modern business environment and address various
The Indian government is deeply committed to the research
customer needs through product differentiation and the
and usage of AI in the county. India recently joined the
generation new insights from data.
Global Partnership on Artificial Intelligence (GPAI) as a
founding member. Along with 15 other nations, which
Chatbots are also being seen as an equalizer that will help
include the US, UK, Australia, Canada, and France, the GPAI
in the creation of a fairer, more inclusive financial system.
has been formed as an initiative to manage the responsible
With the use of AI, and specifically chatbots banks can offer
development and use of AI. The GPAI is a first of-its-kind of
customers - especially those in rural areas, who are presently
initiative for better understanding the challenges and
unable to access the desired levels of banking benefits -
opportunities around AI by using the experience of the
greater access to banking facilities, credit options, and
diverse nations. India's digital banking and finance sector,
wealth management products.
including retail banking, has witnessed immense growth in
the past two decades. This transformation has primarily
Reference
been driven by an increase in the use of digital payments
1) Techtarget.com
across sectors and industries using chatbots.
2) https://www.idrbt.ac.in/assets/publications/
The proliferation of digital payments and banking - which Best%20Practices/2020/AI_2020.pdf
has helped generate financial transaction data that banks
3) www.engagely.ai
can use to monitor, predict, and respond to consumer
4) www.surbo.io
behavior better - and the rising demand for online offerings
5) www.dexlabanalytics.com
of banking and financial information have opened up
6) Thefinancialbrand.com
opportunities for chatbots implementation in retail banking
and financial and investment services in India. The use of 7) Research paper available dated 31.12.2019 on "Chatbot
chatbots in banks and financial institutions has the potential and virtual assistants in Indian bank" by Netrapal and
to transform how these entities operate. The banking Devendrapal (MDI) available on researchgate.net
34 | 2022 | AUGUST | BANKING FINANCE