No industry has been left untouched by the revolutionising power of artificial
intelligence. And the same goes for banking. With a lot of banks who’ve already
adopted AI and with those who’re still on the way, banking services seem to have
been getting elevated. With the right strategy and use of AI, it can help with
hyper-personalised experiences, risk management, cost optimisation and a lot more.
Pavitra Pradip Walvekar, the visionary leader steering Kudos Finance and
Investments Private Limited, talks about it and says, “AI is no longer the future, but
the present. It has already kickstarted a train of innovation and we must hop on it
before we’re left behind.”
The aftermath of the 2008 Global Financial Crisis continues to shape the banking
sector even 15 years later. Intensified market competition, lower interest rates, and
stringent regulatory frameworks have placed consistent pressure on profitability.
However amidst all of this, AI is emerging to change the banking landscape and scale
it towards higher levels of productivity and healthier financial outcomes.
The global provider of banking infrastructure software mentioned that banks that
don’t fully incorporate AI in their tech stacks will lag behind as compared to those
who do. Pavitra Pradip Walvekar mentions, “AI isn’t here to replace, but to support
us in our journey, in ways we can’t imagine. We don’t have to fight the change but
adapt to it and see the wonders we can do with what we have. To survive and grow,
one must adapt and that’s what the banking sector is striving to do with AI as well.”
In 2024, a lot of banks ventured in incorporating AI into their machinery. As per
IBM’s report of- 2025 Global Outlook for Banking and Financial Markets, 78% of the
banks had a tactical approach to gen AI while 8% were developing systemically for a
longer run. Which implies that AI is already in the game, and gradually the industry
is adopting it further. The same report also stated that 16% of all global clients have
been on board with the idea of branchless banking, with only digital banks being
their sole and primary bank. This also foreshadows a future where AI’s incorporation
will be instrumental in making banking more efficient.
Backbase, the financial technology firm, predicts that customer experience will be a
key segment where AI’s impact will be seen this year. Even though banks adopted
digitisation, cracking the code for customer service and engagement is something
they hadn’t been able to do efficiently. Even having bots hasn’t been of much help
even though they’ve been efficient because as per a recent survey 63% of people still
want one-on-one conversations. This is where AI powered customer service agents
will revolutionise experiences in 2025.
Apart from customer experiences, risk management is another pillar that will be
strengthened by the AI. From credit risk assessment, fraud detection and prevention
to stress testing and scenario analysis, enhancing decision making and so on.
Incorporating AI to strengthen risk management will increase efficiency and
profitability in the banking sector.
Another powerful change by incorporating AI incorporations will be autonomous
banking operations. All the paperwork that would take hours, can be eventually
driven by artificial intelligence with AI driven document processing – including loan
approvals, fraud detection, compliance checks and so on. AI can also be instrumental
in handling settlements, reconciliations and regulatory reporting.
2025 will also be the year where Neobanks, fintech and tech led banking will be at
the forefront. It will disrupt traditional banking more and create standardised digital
experiences. The neobank market is expected to grow at a CAGR of 54.8% until
2030. The forms of digital first banking will operate with AI in its core functioning,
eliminating human intervention. They will also incorporate more voice and facial
recognition enabled operations.
With so many changes storming in and adaptation being the core of survival, there
are several other ways in which the banking industry can continue to strive.
Instead of completely tossing out the traditional way of banking, one must find a
way for both to exist. The traditional form is built on a strong core foundation with
powerful logic at the centre of it all. The move should not be to eliminate those but
to make optimal use of it as we transition into the newer ways.
The next way is to create a unified platform model which is secure and adaptable.
One way is to adopt headless banking modernization, which is something that 64%
enterprise organisations are practising. Currently banks deal with cost ineffective
and time consuming approaches, but with a headless approach, one can create a
digital banking platform which unifies everything. According to Backbase, this one
move can futureproof and modernise your banking.
Lastly, having the right tech strategic partner in this journey is key. To navigate the
new wave of changes, finding the right vendors is just as important as carrying out
the changes. While the requirements and needs will dictate which partner you go
for, ensure that the partnership is a fertile ground for innovations that also gives you
access to efficient solutions. Also ensure that it’s not a vendor who you have on
board, but a partner who’s equally invested to navigate the new waves of artificial
intelligence and tech.
“Change is always intimidating, but adaptation is key. The journey of transition
becomes much smoother when you’re in the right environment and surrounded by
the right partnerships. There’s a saying that to go fast, you can go alone. But to go
far, you must walk with a partner. So, even in these times of rapid technological
advancement, ensure you have the right tech partners you can truly rely on,” says
Pavitra Pradip Walvekar.
