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Banking industry embraces AI for pricing, fraud prevention
Industry leaders told a panel discussion on Tuesday at the World Financial Innovation Series that AI was overhauling banking through predictive analytics that enabled tailored insights, precise pricing and reduced fraud risks.
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White clouds sweep over high-rise buildings on March 14, 2021 in Jakarta’s Sudirman Central Business District. (AFP/Adek Berry)
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anking leaders affirmed that artificial intelligence (AI) was overhauling the industry especially digital banking, empowering lenders to provide tailored insights and precise pricing while reducing fraud risks through predictive analytics.
“If we use more AI, we can accurately [generate] customer profiles and pricing strategies, even influence customer behavior,” Kirill Odintsov, risk underwriting and data analytics head at Home Credit Indonesia, told a panel discussion on Tuesday at the World Financial Innovation Series, which runs until Oct. 25 in Jakarta.
Not only did AI allow for more streamlined processes, but it also improved banks’ understanding of their customers, he added.
According to a report by Business Insider, banks are projected to save US$447 billion through investing in AI technology for front and middle bank offices by the end of 2023.
This includes cost savings of $199 billion from improved customer identification and conversational banking services, $217 billion from enhanced anti-fraud and risk detection and $31 billion from optimizing back-office processes, such as strengthening loan covenants through smart contracts.
Odintsov also emphasized that AI was effective as a powerful deterrent to fraudulent activities.
“AI controls ensure accuracy and enhance fraud prevention,” he said. “When we reduce human intervention, the potential for fraud diminishes, as individuals can manipulate data.”
