Artificial Intelligence (AI) is part of us and has transformed how we live and work today. This transformation is also evident in the banking industry. What once required long queues and endless paperwork can now be completed in minutes with the help of AI.
While AI continues to advance in the world of finances, how will these changes affect how you manage, spend and secure your money?
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What Consumers Are Already Experiencing
“One of the most prominent uses of AI in banking these days that more and more people are utilizing is AI-powered robo-advisors. While robo-advisors certainly advanced due to AI technology, they may not be able to provide the most personalized guidance,” said Edward Tian, CEO of GPTZero. “With a human advisor, you can often more accurately explain your financial situation and goals, having a back-and-forth discussion that reveals the intricacies of your finances that robo-advisors simply may not uncover.”
Alena Robertson, Bank Secrecy Act (BSA) manager at Grasshopper Bank, said another major use is what she referred to as personalized customer service and smoother account-opening processes. Robertson said the other side of this, though, is manipulation of AI.
“Consumers should be aware that bad actors can use AI to conduct phishing attacks, identity theft and other crimes. Banks are aware of these risks and work diligently to combat fraudsters,” she explained.
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What AI Means for Your Money
“AI integrations could transform the banking industry for a better client experience and we have already begun to see this flourish. Many people are shifting to digital banking with the desire to have their banking needs solved at their fingertips. When digital banking is paired with AI that can offer personalized solutions, it makes money management easier than ever,” Robertson said.
However, it’s important to understand the risks and rewards of using AI tools to manage your money. Know how your bank is storing and using your data. It’s a good idea to view AI as a supplement, not a replacement for human expertise.
The Benefits of AI in Banking
The impact of AI is profound, with automation and fraud protection being the most popular.
“AI can provide financial institutions additional protection against cybercrimes like identity theft, phishing scams and deepfakes. By leveraging advanced algorithms, AI can rapidly analyze digital content and flag doctored images or misleading emails before they are opened,” Michael Jung, chief financial officer (CFO) of DeepBrainAI. “This real-time filtration ensures that customers receive verified information from their bank, keeping a transparent banking process and minimizing the potential for manipulation.”
With AI tools, you no longer have to rely on traditional banking hours for support or transactions. With a smartphone and an internet connection, you can access nearly all your banking needs with just a few clicks of a button.
Concerns Surrounding the Use of AI in Banking
While AI offers several benefits, it also comes with challenges — with security being a major concern.
“Despite its promise of enhanced security, AI raises valid fears about data privacy and cybersecurity. Open banking frameworks and data-sharing mandates could expose financial information to risks of misuse. Additionally, cyberattacks targeting AI-driven platforms could have systemic implications,” said Parijat Sinha, head of open banking at FIS.
“Addressing these concerns requires robust encryption, transparent governance and adherence to privacy laws like GDPR. Institutions must also establish explainable AI systems to maintain consumer trust while mitigating bias or decision errors,” Sinha explained.
Bias in AI algorithms is another concern. If the data contains biases, these could unfairly impact decisions like loan approvals or credit scoring. It’s crucial for banks to ensure their AI systems are fair and transparent.
Finally, AI could potentially pose a threat in the job market. Some traditional banking roles are likely being replaced by AI.
The Future of AI in Banking
AI is here to stay, so the earlier you embrace it, the better. As it advances, we can expect to see better tools in the banking sector.
“It’s pretty natural to wonder if your data is safe or how decisions are made by AI-based systems. That’s why I believe we will ultimately see banks adopt a hybrid approach, where human oversight goes hand-in-hand with AI-powered decision-making,” said Roman Eloshvili, founder of ComplyControl. “Transparency is also a big factor in this: banks need to be upfront about how their AI works and how it uses client information. This will help alleviate fears and boost trust.”
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This article originally appeared on GOBankingRates.com: How AI Is Transforming Banking and What It Means for Your Money
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
