The banking sector plays a crucial role in the development of a country’s economy. Especially when the country is at war. With the outbreak of the great war, it became clear that Ukrainian financial institutions are in need of urgent innovative solutions as never before. The constant threat of cyberattacks, customer outflow, a decline in the number of banking services users, and the country’s low economic activity are exactly the conditions in which the introduction of artificial intelligence technologies has become a real necessity.
Large foreign banks have long been actively using AI for various purposes. JPMorgan has implemented an AI system to automate the analysis of legal documents. In Asia, banks use it to create chatbots. Japanese banks, such as Mizuho Financial Group and Sumitomo Mitsui Financial Group, are actively implementing computerized systems to replace manual labor.
At important international events, such as the Web Summit in Lisbon, artificial intelligence is already seen as a tool that will open up new opportunities for customer acquisition, content creation, and marketing activities.
But are there any prospects for the development of AI in Ukrainian banks? After all, according to the World Bank Group, about 40% of adult Ukrainians still do not have accounts in financial institutions and use cards only for cash withdrawals.
AI in the Ukrainian banking sector: reality or myth?
Artificial intelligence is a set of information technologies capable of performing complex tasks, creating their own knowledge bases and algorithms. The development of these technologies in the banking sector promises revolutionary changes in customer service and optimization of internal processes. And these changes are already taking place.
The main task of Oschadbank is to develop for the comfort of its customers. Therefore, at the earliest opportunity, we started implementing digital transformation in the bank’s operations.
We introduced and improved our chatbots. They significantly improve the quality of customer service, as they perform various functions 24/7: answering inquiries, conducting financial transactions, and even providing advice.
The result of our work is Sofia, a voice assistant that advises customers on a wide range of issues, such as making appointments at branches and redirecting customers to the appropriate specialists depending on their requests. Thanks to the use of Sofia, 75% of customer requests were automated, processing time decreased, and the overall level of customer satisfaction improved.
Other Ukrainian banks also have cases of successful integration of artificial intelligence. These include optimizing the loan portfolio by analyzing customer behavioral factors, developing personalized financial products, and monitoring customer transactions to improve cybersecurity.
A logical question arises: why does almost every Ukrainian bank want to digitize? It’s simple: the introduction of online platforms, voice assistants, and chatbots allows customers to use banking services 24/7 without leaving their homes. This saves time, simplifies communication with the bank, and meets the needs of the modern user.
We can already conclude that the trend in this area will continue. There are several large-scale reasons for this.
Financial market regulators are considering using AI-based models to prevent fraud and money laundering.
Trends in the rising cost of corporate lending and deposit outflows will require new approaches and investments in risk management and digital technologies.
The development of fintech, the popularity of contactless payments, the proliferation of mobile devices, and the introduction of digital technologies in public services are growing rapidly every day.
Everything indicates that Ukrainian banks need to adapt to changes, invest in the latest technologies, and develop strategies to effectively integrate digital tools into their operations. However, first, they need to ensure a high level of digital security and privacy, as well as enlist the support of the government.
Strategy and prospects for AI development in Ukraine
It is important to understand that the integration of AI into the work of Ukrainian banks requires coordinated efforts of the government, regulators, banking institutions, and the scientific community. Today, there is a need to harmonize legislation with international standards, ensure cybersecurity, and create financial inclusion. In addition, Ukrainian banks face the challenge of integrating AI into their existing systems.
To address the growing demand for financial technology and digitalization, in July 2020, the National Bank of Ukraine approved the Strategy for the Development of Fintech in Ukraine until 2025.
The main objectives of the strategy are to introduce new financial products, ensure consumer protection, reduce transaction costs, and create competitive market conditions for financial service operators.
In the same year, the National Bank of Ukraine and the International Finance Corporation (IFC) signed a Memorandum of Understanding. This agreement was part of a larger initiative – the four-year Financial Inclusion for Economic Growth Technical Assistance Program, implemented in partnership with the Swiss State Secretariat for Economic Affairs (SECO) and the UK government’s Good Governance Fund in Ukraine.
These important steps demonstrate the readiness of the Ukrainian banking sector to innovate. This makes it possible to consider the integration of artificial intelligence into various areas of the sector.
Areas of AI development in the Ukrainian banking sector
Digitalization of the Ukrainian banking sector opens new horizons for the development of financial services. And these horizons are numerous.
Creation of deeply individualized banking offers. This is done in a simple way. The first step is an automatic analysis of the client’s financial behavior. Then – the selection of products and services that meet the specific needs of a particular client at a certain stage of his life.
Predicting financial risks and improving the efficiency of asset management. AI allows collecting and analyzing large amounts of data, revealing patterns that are not always obvious to the human eye.
Preventing fraud and maintaining the security of banking operations. The need to protect confidential data has become especially urgent in the face of growing cyber threats. AI identifies hacker attacks in real time by analyzing system behavior patterns that may indicate fraud attempts.
Credit scoring. The process of assessing the creditworthiness of customers and predicting their ability to repay the loan on time can also be made automatic.
Particular attention is paid to innovations in the insurance sector, where artificial intelligence can make a significant contribution to the development of personalized services, mobile applications, the use of blockchain and smart contracts, and ensuring a high level of data protection.
Despite all the benefits, banks need to implement development strategies that strike a balance between innovation and customer protection. Otherwise, the situation may get out of hand.
Examples of failed AI implementation in the banking sector
HSBC has recently introduced VoiceID, a biometric voice identification system, to make access to banking services more secure. However, it turned out that the system could be circumvented. Identification could be performed by a person with a very similar voice or by fraudsters trained in advance.
Bank of America’s Chatbot is also not a very successful experiment. The task of the chatbot is to provide customers with personalized support and financial advice. But the system did not always manage to understand the user’s request correctly.
Of course, the results of such campaigns are disappointing: new risks to financial security emerge, loyalty to banks decreases, and the outflow of potential customers intensifies. All this leads to a decline in lending revenues and a loss of market share.
Therefore, it is necessary to prepare for the introduction of digitalization in the banking system in a comprehensive, responsible and honest manner.
Why the future of the banking sector is impossible without artificial intelligence
The integration of AI into the Ukrainian banking sector opens up new prospects for financial institutions.
Every day, financial technologies cover an increasingly wide range of services and products, from digital banking and crowdfunding to insurance and investment management. Payment systems, cryptocurrency acquiring systems, brokerage companies, and cryptocurrency exchanges use modern technologies to ensure fast, secure, and convenient financial transactions.
The growth of neobanks and fintech companies demonstrates the high potential for innovation in the financial sector, providing customers with more choices and access to financial services. This, in turn, encourages traditional banks to intensify their own innovation processes and look for ways to integrate digital technologies into all aspects of their operations.
Optimization of operating expenses, reduction of financial risks, improvement of credit scoring, and ensuring a high level of security of banking operations are the benefits of digitalization for which we are ready to change and improve.
And this is good news, because the level of development of our country’s economy depends on the ability of the banking sector to keep up with the trends of our time.
But it is worth remembering that the transition to innovative technologies requires not only significant investments but also a comprehensive approach.
Each financial institution should understand its technological capabilities and limitations. Banks should take into account the ethical aspects of using AI, ensuring transparency and fairness in decision-making, and guaranteeing the confidentiality of customer data.
To address these challenges and maximize the potential of digitalization, banks should develop comprehensive strategies that include investments in technological infrastructure, staff training, development of digital literacy among customers, and ensuring a high level of security for banking operations.
source : https://www.oschadbank.ua/en/news/stucnij-intelekt-v-ukrainskomu-bankivskomu-sektori-mozlivist-ci-neobhidnist