Authors: Vasiliki Tzouvara, Evangelos Manouvelos

Title: From Automation to Personalization: How Artificial Intelligence is transforming the Banking Industry.

Abstract

The development of computational power, data availability, and advances in algorithms have contributed to the rapid development of Artificial Intelligence (AI), making it the technology of the 21st century that will more strongly affect every aspect of human activity. Scientists liken the effects of AI to the effects of electricity in previous centuries. The use of innovative technologies worldwide is increasing by diversifying the behavior of customers who are more inclined to use them to reconcile with financial institutions. Thus, their expectations for innovative services are increasing.

According to the Financial Stability Board, AI can help increase revenue, reduce costs and effectively manage risk in the financial sector. Banks need to use AI to meet modern challenges to deliver personalized high quality services and make them more competitive.

The aim of this work is to present the concept of AI and how it is used in the Banking industry. The factors that contributed to its development and the advantages and disadvantages of its use in the Banking sector are developed. The paper examines how ΑΙ is transforming the sector from providing automated services into developing personalized products and interactions.

To this end, international practice is examined and various case studies are critically assessed, such as JP Morgan Chase’s Contract Intelligence (COiN) platform, designed to analyze legal documents and extract important data points and clauses, Wells Fargo’s AI-driven chatbot through the Facebook Messenger, Bank of America’s intelligent virtual assistant named erica, HSBC’s robots which help spot money laundering, fraud, and terrorist funding, Deutsche Bank’s new AI-based equities algorithmic platform, which was designed with a self-learning mechanism, allowing its systems to predict equities pricing and volume with more accuracy.

4. JEL classification codes

G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages

O33 Technological Change: Choices and Consequences; Diffusion Processes