Not too long ago, bank artificial intelligence was a sci-fi fantasy. Today it’s the driving force of an entirely new financial revolution.
AI has moved far beyond “buzz word” status. It’s now the technology that is relative for better decision making and safer transactions in banks and fintechs alike. AI is now far from a novelty, it is the behind-the-scenes secret to a transparent and more engaging digital finance experience.
By 2030, AI will be contributing more than $1 trillion annually to global banking. In the United States, AI could result in $200 to $340 billion in annual efficiencies for banks by 2025. This is a tidal wave of efficiencies that is motorboating forward now.
Let’s take a look at how AI-powered finance software solutions are changing the rules of the game in efficiency – from fraud detection to customer service.
Catching Crooks in Milliseconds: AI and Fraud Detection
The fact that fraudsters evolve is incredible, but the fact that AI evolves even faster is even more unbelievable.
Detecting fraud is less about following static rules or out-of-date red flags and more about completing transactions in adaptive and real time. Today’s systems are fast and adaptive. More than 70% of U.S. financials are utilizing AI products to detect fraud. There are still rules in AI, but it is a lot more than that. AI analyzes millions-of-transactions in real time, looking for neural patterns that would not otherwise exist in the human brain. Looking for specific correlations between multiple factors.
Take for example recent Visa numbers: Visa reported in 2023 that its AI detected nearly $40 billion in fraud attempts in a single year – all without the need for the customer to take action or ever alerting its customers of suspicious activity. Visa flagged 80 million suspicious transactions in total.
It is not just the large banks that are utilizing AI to predict the fraud landscape. Fintechs such as PayPal and Stripe are building adaptable AIs that identify fraud trends and peak suspicious activity within seconds. We also know deepfakes, voice impersonations, and fake IDs are on the rise – monitoring for these different types of scams is necessary.
The possibility of significant losses are high. Research estimates U.S. losses from fraud may triple to $40 billion by the year 2027. Fortunately for all of us, AI continues to evolve and will recognize minor variances used by fraudsters to enable detection of fraud before a transaction rather than after a transaction.
Behind the Scenes: AI-Powered Automation
Now imagine replacing thousands of hours of repetitive human labor with seconds of machine intelligence. That’s not a dream – it’s already happening.
Take JPMorgan’s COiN (a.k.a Contract Intelligence) system. It reads and analyzes complex legal documents.12,000 loan contracts in a single go. What used to take 360,000 hours of lawyer time now takes minutes.
This kind of AI-driven automation is spreading across banking operations. AI is now routinely used to:
- Verify documents for anti-money laundering compliance
- Process loan applications and flag anomalies
- Reconcile accounts and auto-generate reports
- Turn paper forms into digital workflows instantly
Even small banks are getting in on the action thanks to cloud-based AI platforms. The result is more time for strategic thinking and customer relationships. And fewer headaches over manual grunt work.
Meet Your Digital Banker: 24/7 AI Customer Support
No more hold music. No more “please press three.” Just instant answers from your pocket.
Say hello to Erica and Fargo – both AI-powered assistants from Bank of America and Wells Fargo respectively, that are changing the game in personalized banking. Erica alone had 2.5 billion interactions in 2024 and helped 20 million customers with budgets and balance checks.
Wells Fargo’s Fargo handled 245 million interactions last year. It has multi-language capabilities and can also perform transactions like money transfers and fraud alerts. The best part? These AI-powered assistants are able to answer up to 80% of typical queries, which is a win-win for both the banks and customers.
These bots aren’t just for answering questions – they can also do things like:
- Notifies the user of unusual activity
- Gives personalized savings advice
- Pre-approves credit offers
- Answers in real-time, 24/7
From Reactive to Proactive: Predictive AI Takes the Lead
When it comes to AI superpower worth celebrating, it’s foresight.
AI can identify what customers want before they want it by assessing mountains of historical and contextualized behavioral data. It can issue mortgage pre-approvals and indicate anticipated cash flow problems. Predictive AI is changing prediction from art to science.
For example, U.S. Bank is using behavioral analytics to send customized call-to-action offers to satisfied customers based on imperceptible digital behavior. The outcome is improved engagement and retention. It’s no surprise that 83% of banks identify personalization as a growth priority.
And that’s just for starters. AI is also helping a bank to:
- Identify early warning signs of credit risk
- Forecast future liquidity needs
- Monitor customer satisfaction and reduce churn
- Experiment with and model business strategy
In fact, some organizations are building “AI twins” to digitally emulate operations and model scenarios with minimal risk.
The Generative AI Wave
Generative AI is the new dawn, and it is already starting to be written.
From JPMorgan’s IndexGPT helping financial advisors with live research to Goldman Sachs speed coding using generative AI, it is now going from research to practice.
The market is ripe for infinite growth, expect the generative AI in banking market to grow from $1.3 billion in 2024 to more than $21 billion by 2034.
Banks are also experimenting with multi-model orchestration – using a combination of AI systems to do fraud prevention, compliance checks, and used for strategic insights. Some banks are even using AI to determine branch site locations, rebalance portfolios, or staffing levels.
As new tech like FedNow makes payments happen instantly, AI will be used more and more. For example, it’ll help verify identities by analyzing voiceprints or how someone types.
AI Isn’t a Trend – It’s the New Operating System
The reality is this: AI in banking is not a step-up. It’s a complete re-wiring of the system.
Sure, challenges remain – legacy systems, regulation, the skills gap – but the possibilities are endless. Banks using responsible AI are already way out in front, improving all parts of how they run things and serve their customers.
The leaders of the AI revolution? They won’t just stay afloat.
They will contribute to the future of digital finance.
