Analyzing the use of AI in the banking system by the SWOT model

Analyzing the use of AI in the banking system by the SWOT model A Strengths AI will enable the creation of openness for banks by supporting the creation of analytical and data processing capabilities according to a platform based operating mechanism, allowing the bank to operate effectively as a platform ) Allows to modularize transaction nodes, form open platform APIs (Application Programming Interface) Application programming interface, development of microservices This enables efficient explo.

Analyzing the use of AI in the banking system

by the SWOT model

A.Strengths

 AI will enable the creation of openness for banks by supporting the

creation of analytical and data processing capabilities according to a platform-based operating mechanism, allowing the bank to operate

effectively as a platform ) Allows to modularize transaction nodes, form open platform APIs (Application Programming Interface) - Application programming interface, development of microservices This enables efficient exploitation of the data capitalization generated from bank

transactions Vietnamese commercial banks have realized the potential, challenges as well as urgent need to meet the requirements of the open banking ecosystem

 AI will help banks improve learning through and deep learning, develop smart algorithms and smart transactions This will help reduce the risk of transactions, increase the efficiency of data mining, and expand

transaction-related operational capabilities In the trial period, MB

officially became the first Vietnamese commercial bank to join the

Contour Network and offer blockchain-enabled L/C services to

corporations MB's L/C (letter-to-credit) services allow a secure process

of delivering L/C services, from issuance to document presentation, to take place on a single unified platform

 AI will help the bank automate through optimized processes by

automating processes, automating operations, and optimizing digital processes

 AI will help banks develop solutions that enhance and scale digital

architectures This will help improve the data capitalization of the

transactions that the bank can make

We have reduced costs to store and process data, increased access and

connectivity for all, and rapid advances in AI technology Especially in the complicated pandemic situation, the demand for customers to come directly to banks for transactions has decreased significantly but instead is the support of online banking apps Long waits for support at banks are also annoying, and the

emergence of AI virtual financial assistants has significantly improved the quality of customer experience

B Weaknesses

Highly expensive

Production and maintenance of artificial intelligence demand huge costs since they are very complex machines like advanced software programs which require regular updates to meet the needs of the changing environment )

Bad Calls

Though Artificial Intelligence can learn and improve, it still can’t make

judgment calls Humans can take individual circumstances and judgment calls into account when making decisions, something that AI might never be able to

do Replacing adaptive human behavior with AI may cause irrational behavior within ecosystems of humans and things

Distribution of Power

There is a constant fear of AI superseding or taking over humans Artificial intelligence can give a lot of power to the few individuals who are controlling it -> AI carries the risk and takes control away from humans while dehumanizing actions in several ways

Unemployment

The replacement of the workforce with machines can lead to wide-reaching unemployment Moreover, if the use of AI becomes rampant, people will be highly dependent on the machines and lose their creative power

C Opportunities

Enhanced Customer Experience

The customer being the key driver of a service industry, customer service is at the forefront of any business AI can be used to derive a better understanding of customers spending patterns, which will help banks customize products by adding personalized features This supplements meaningful customer

engagement, building strong relationships, and growth of business for the bank

Use Of Chatbots

Customer satisfaction is also enhanced as they can avail of the service in the comfort of their homes without having to visit branches —saving their time Chatbots can be enhanced in the future to announce new offers to the customer like loans, alert customers if they have any EMI payments due, suggest good discounts based on the tie-ups the bank has with e-commerce sites, etc

Machine Learning and Cognition can be used to identify suspicious data

patterns and convince banks if the actual source of money is legal or illegal AI can also study past consumer behavior to predict future requirements, which helps banks to up-sell and cross-sell successfully

Wealth Management And Portfolio Management

 AI-based systems help potential investors by analyzing their salary and spending patterns They can also predict market trends and choose the right funds for their portfolio by determining the adequate sum of money they should invest every month in realizing their dreams All this can be done without visiting branches or hiring experts In the world of ‘Banking

at your fingertips’, mutual funds, fixed deposits can be created at home, and the money is redeemed when necessary

 AI technologies enable banks to bring more efficiency to their operations and manage costs They can also help manage contracts and act as

brokers, simultaneously taking over routine tasks, thus improving

productivity and efficiency All this transforms into increased revenue, reduced costs, and a boost in profits

Intelligent Character Recognition System

This system has been used by some foreign banks to recognize, extract

important information from old loan applications, lease agreements and feed it

to a central database that can be accessed by everyone

D Challenges

Governance Structures and Regulations: Implementation of any new

technology can be at odds with the highly regulated banking and financial services industry Risk and compliance teams may struggle to understand the potential vulnerabilities or create appropriate internal regulations Without the

right governance, the deployed AI solution may result in unintended

consequences such as access denied to financial products or privacy breaches

Lack of Clear Strategy: In a constantly evolving technological environment,

amid high costs for new infrastructure and human capital, executives may fail to fully embrace AI technology If that happens, it will be difficult to implement a successful organization-wide strategy to effectively utilize the AI technological capabilities

Many banks face the challenge of an unwillingness to improve or adapt to new methods Standardized with set practices in conventional ways, some locations

in tier two and three cities across the country face this challenge These units also lack the level of commitment required to upskill their labour force and human resources skills

With the lack of supporting data to implement operational changes, the banking sector is facing a disconnect between the need and response from customers The banks adapt to a switch that fails to comply with the actual requirement of the masses

Banks with upscaling use of artificial intelligence need to keep up with the regulatory standards of government The increasing services like net-banking and online transactions come under the ambit of privacy regulation policies as well, which necessitates compliance from the bank’s end

V Current situation of AI in the banking system

Current situation

 AI in banking is maturing, bringing the potential for higher-complexity solutions that generate positive ROI across business segments

 Most banks (80%) are highly aware of the potential benefits presented by

AI and machine learning, per an OpenText survey of financial services professionals In fact, many banks are planning to deploy solutions

enabled by AI: 75% of respondents at banks with over $100 billion in assets say they're currently implementing AI strategies, compared with 46% at banks with less than $100 billion in assets, per a UBS Evidence Lab report seen by Insider Intelligence Certain AI use cases have already gained prominence across banks' operations, with chatbots in the front office and anti-payments fraud in the middle office the most mature

Banks can use AI to transform the customer experience by enabling frictionless, 24/7 customer service interactions — but AI in banking applications isn't just limited to retail banking services The back and middle offices of investment

banking and all other financial services for that matter could also benefit from AI

 AI application in the world

In June 2018, BofA released Erica, an AI-powered virtual assistant that uses natural language processing (NLP) to understand and respond to customer queries In addition, Erica also leverages a constellation of predictive analytics, machine learning and AI to:

Warn customers if their spending habits are likely to bring their balance to zero one week in advance

Notify customers if their credit score changes as a FICO scoring system tool is embedded within the app

Reminding customers of recurring or late payments

Search for account information and past transactions on request

Using anomaly detection software, flagging payments when they are more expensive than expected

Lock/unlock credit and debit cards at the customer’s request

By applying advanced analytics to historical purchase data, advise customers on how to reduce monthly spending

Over the past 3 years Erica’s popularity has skyrocketed In Q1 of 2021, 19.5 million BofA customers used Erica, a significant increase from the 6.3 million users recorded in Q1 of 2019 In addition, over the course of 2020, clients interacted with Erica approximately 400,000 times a day, up almost 100% year over year

Though Erica was already experiencing steady growth before the pandemic, especially amongst millennials and Gen Z users, about 8 million people used Erica for the first time in 2020 In fact, as many physical locations were forced

to close, the bank taught Erica more than 60,000 phrases and questions related

to the Coronavirus to help field questions on the subject

 AI application in Vietnam

On February 4, FPT Smart Cloud and SeABank officially signed a strategic cooperation agreement in the fields of artificial intelligence and cloud

computing Accordingly, SeABank will put into operation the virtual assistant FPT.AI switchboard

FPT.AI is promised to provide customers with service experiences that "don't stop at a quick level, but must be instant"

At SeABank, FPT.AI helps the bank optimize operations, especially at peak times, automate processes, and focus human resources on more complex and important tasks Besides, the solution allows customers to experience

outstanding services such as consulting and answering questions in the shortest time, 24/7

The FPT.AI assistant deployed at SeABank will perform two automatic

operations: card renewal and passbook and reminding customers of payment schedules

FPT AI virtual assistant is a solution that allows automatic conversations

through the switchboard channel, including making outgoing calls and receiving incoming calls, or intelligently forwarding calls in a friendly way, natural and seamless FPT.AI's virtual assistant is capable of handling thousands of

conversations at the same time with high accuracy and uniformity

In 2020, the virtual assistant FPT.AI switchboard has been applied by Home Credit Vietnam to the call center service, serving the needs of hundreds of thousands of customers automatically, from handling inquiries, pay attention to the payment schedule After 3 months of operation, the solution helped Home Credit Vietnam achieve initial successes such as automatically conducting 2 million conversations with customers, with a duration of each conversation ranging from 1 to 2 minutes and increasing 40% of the operating efficiency of this financial company

As a strategic solution of FPT, FPT.AI is a comprehensive AI platform, aiming

to breakthrough business performance, effectively engage customers with

automated customer care processes, and open up opportunities to create value new value for businesses in the future through the application of the most

advanced machine learning and deep learning technologies in the field of AI FPT.AI currently owns 5 AI technology solutions including: Intelligent

conversation platform, recognizing and extracting content from text captures, automatic text-to-speech, virtual assistant switchboard, electronic customer identification

VI, Trend of AI in banking system

Almost every facet of life nowadays is aided by technology The use of artificial intelligence in banking is moving from a leading-edge option to a core

capability

Customer Service

Customer service is regarded as the public face of every company When a customer has a pleasant experience interacting with a company, it is considered successful When you visit the bank, you will speak with a customer service representative about your concerns Account information, transaction history, check clearance, and the opening of a new bank account are all things you should question about If the queue is large, there may be long waiting chores to

meet a CSR Artificial intelligence is currently being used by many investment institutions to speed up this time-consuming and repetitive activity

Internet and Mobile banking

People are abandoning personal computers in favor of cell phones, which have grown in popularity Mobile phones have become the exclusive means of

communication, planning, reading, lifestyle management, and financial

planning For customer service and banking processes, banks now require more complex AI software

AI for Capital markets

A capital market is a place where traders can make money by investing in bonds, stocks, and other long-term projects Formerly, capital markets only went to places where large guns were present With the advancement of

technology, even a low-income individual can now participate in financial markets In other terms, capital markets are not becoming more decentralized, and everyone, even from home, can engage

Wealth Management

Today, wealth managers are gradually putting together crucial AI scenarios to meet the banking needs of high-net-worth individuals AI assists various wealth management businesses in performing critical banking tasks efficiently They can gain more experience with wealth management responsibilities, making customers more comfortable

AI for Compliance in Banking

Compliance is a set of rules that certain banks must follow, with some

exceptions Because these rules are critical for keeping processes up to date and avoiding any risks or losses Without a compliance regulation, the baking

industry faces severe difficulties, including the loss of licenses Bank officials can alter the compliance regulations to meet the needs of their particular

banking industry Various regulatory compliance is growing with wealth

management The GDPR or MiFID II are two examples of financial advising services

Risk Management

For risk management in the market, AI is a great flux Many frauds and dangers

in the banking sector can be detected using AI technologies and software To assess and arrange unstructured statistics, artificial intelligence (AI) and risk management are required Risk managers in finance are concerned with losses and risks, and they use AI techniques to try to control them

Artificial intelligence is becoming an increasingly important part of financial and corporate growth Machine learning allows for the monitoring and

evaluation of unstructured data, which saves both money and time These also aid in mitigating and compensating for various hazards by regulating and

minimizing them

Records Maintenance

In the banking industry, AI software is used to maintain records Because it is critical to retain the client’s information or data in a secure format As a result, a fantastic piece of software Good or excellent scanned images of the documents are generated using optical character recognition By altering the forms and all

of the characters in the papers, OCR converts the paper records into a digital display This can transform official bank documents into a one-of-a-kind

format

Accounting

Accounting aids in the conversion of data into a more precise format

Traditional computing technologies are slow, and they cost more money and time However, AI software now improves accuracy and bookkeeping

capabilities, making them simple and dependable Accounting may be aided by

AI by using business planning, simplifying statistics, and conducting

investigations

Human Resources

The human resource department is in charge of job postings, production, and upkeep In the past, HR had to deal with significant difficulties in keeping the entire process running smoothly However, with the introduction of new AI technologies, everything is now controllable and manageable Banking officials can use AI to create HR methods for handling their work and gaining greater benefits It aids in increasing the bank staff’s total output by increasing their participation and interaction Artificial intelligence has the potential to increase average profits and give workers more power

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