APPLICATION OF ARTIFICIAL INTELLIGENCE IN BANKING: A STUDY BASED

ON SBI-SIA VIRTUAL ASSISTANT

Abstract

Artificial intelligence (AI) is now widely acknowledged as one of the most important digital
transformation enablers across a significant number of industries. Artificial intelligence (AI) has
the potential to facilitate enterprises. become more imaginative, versatile, and adaptable than they
have ever been. AI is already being applied to enhance productivity and competitiveness while
also driving digital transformation in a range of organizations. AI is supporting Indian banks in
upgrading their operations across the board, from accounting to sales to contracts and
cybersecurity. This is a case study based on virtual assistant of SBI-SIA. Recent developments and
emergence of virtual banking and the trends in the modern banking systems explained in this study.

Keywords

Artificial intelligence, Digital banking, Virtual Assistant, Virtual Banking.

Introduction

Digital transformation is among the most well-known important drivers of how businesses deliver
value to their customers in a competitive, fast-changing business environment. Artificial
intelligence (AI) is now widely acknowledged as one of the most important digital transformation
enablers across a significant number of industries. Artificial intelligence (AI) has the potential to
facilitate enterprises. become m BHore imaginative, versatile, and adaptable than they have ever
been. AI is already being applied to enhance productivity and competitiveness while also driving
digital transformation in a range of organizations

Significance of the Study

Indian banks are progressively using technologies of the future in order to serve new-age clientele
and expand their development potential. AI is supporting Indian banks in upgrading their
operations across the board, from accounting to sales to contracts and cybersecurity.

Scope of the Study

State Bank of India (SBI) is one of the Top 50 global banks and well on course to break into the
Top 30 in a few years. SBI operates out of 26 countries with over 25,000 branches and 60,000
ATMs generating revenues close to $61 Billion. Over 70 Million customers actively use their
Internet and Mobile Banking channels. This is a case study based on virtual assistant of SBI-SIA.
Recent developments and emergence of virtual banking and the trends in the modern banking
systems explained in this study.

Literature and Synthesis

1. Kaur, J. (2020) pointed out that in a country like India where most of the people were using
banking transactions every day, it was important to implement technological innovations
in banking sector in order to ensure greater transparency in banking activities and attain
financial inclusion. The study was based on the secondary source of data and it tried to
explain the three evolution phase of banking sector, which started from the history of
banking and ended with the nationalization and banking reforms taken place after 1991.It
provided an outlook into the various types of innovative banking, products and services
and the electronic systems. It explained the financial innovation as an instrument to provide
a solution to the problem of financial exclusion and also as a process to add more value
added innovative measures to the existing product and service portfolio in order to enhance
the banking services to a customer oriented approach. The study was concluded with the
statement that the improvement in productivity and the efficiency in banking services
resulted the banking sector in India to promote a competitive position with other banks.
Innovations in the banking sector has acted as a catalyst to convert the Indian banking
sector as a prominent leader in providing better quality innovative products and services
and to drive the financial system in India into a higher economic competency level.

2. Kaur,K.,Sahdev,L.,Sharma.M.,Siddiqui L.,(2020) in the article they explains the influence

of artificial intelligence on the banking industry and how the artificial intelligence is
changing the face of modern day banks. It points out that AI is now becoming widespread
in the banking sector and also the routine and normal tasks which are earlier performed by
the human force are now being replaced by the advance technology. The study emphasing
that advancement in technology and also the human touch is also utmost important. The
results show that the AI is valuable in the field of banking sector and various technologies
have been emerged in AI such as core banking, operational performance, customer support
and analytics.
3. Parimalarani,G.,(2020).pointed out that the effort of digitalisation on the banking sector
created a significant future among the workforce in both public and private sector. The
digital transformation that took place in banks had changed the organizational and
management level design and hiring processes at banks. The increased automation in
banking sector could result in a massive unemployment trend and a fall in demand for
human workforce in banking sector. It pointed out that the day to day banking operations
are going to the pace of digitalisation and so the role of work roles like clerks, middle level
officers are predicting a loss in their positions. The digitalisation widened the point of
contact of the bank users so that they can access the services whenever and wherever they
 want. While analyzing the trend of employment in banking sector its attempted to point out
that 70% of the front office jobs are displaced by artificial intelligence and the positions
like tellers, loan officers, customer service representatives and clerk are replaced by chat
bots, voice assistant and automated biometric technology. It stated that the transformation
in banking sector has created some new roles like cyber security specialist, programmer,
block chain architect, credit analyst etc. The study concluded that the role of human
workforce is not completely outdated, the work of employees along with the digital or
automated technologies will improve the profitability of banks on one hand and reduce the
cost and manual errors on other hand.
4. Rajesh.R., Palpandi.(2015).analysed the impact of technology on the banking sector in
southern Tamilnadu. The information technology adopted in banking sector offered the
banks with benefits such as fast and reliable customer service, development of new
products, information system on real time basis etc. The study was conducted to analyse
the factors for the customers service accessibility and to examine the possible strategies for
improving the technology driven services. Descriptive research design was used and open
ended questionnaire was used to collect the data. The factors of service accessibility of the
customers were studied on the basis of six factors such as banking services, add on
services, front office services, technology enabled services, safety and reliability of
services, using principal component factor analysis. It showed that the main factor that
influencing the customer in accessing service is the banking services. One sample t/ test
was used to identify the strategies to improve the technology enabled services and found
that the weekly accounts statement, email alerts,SMS facility for cash transactions were
the most important strategies that needs to develop. The study was concluded that it was
required for the banking sector to provide a customer friendly approach and provide cost
efficient technology enabled services to the customers.

5. Arabyat,Y.(2014) analysed the role of investment in information technology in improving

the efficiency of the banking sector in India. It pointed out that the technology was
following three directions, firstly, scientific knowledge which creates the required
application, secondly, inventions and discoveries that are created from the use of scientific
knowledge and lastly the scientific application, which aims at attaining results through the
practical usage of the appliances. The study revealed that in order to achieve the positive
results from the investment in information technology, it was necessary to make long term
investments in organizations, needs to arrange for all the requirements that are essential for
the best use of the IT and creates new job opportunities. Frontier efficiency analysis was
used to measure the efficiency of banking sector and production and intermediation
approach were used to identify the banks inputs and outputs. The findings showed that the
medium sized banks had the presence of more cost-scale economies than that of the small
and big sized banks. It explained the IT resources that affects the banking performance in
 four different levels, IT infrastructure which comprises of advances applications, IT human
resources which includes technical and various managerial skills and experience, IT
technical knowledge which refers to the essential know-how required to build IT
applications and customer relationship

6. Shukla,T.,Singh,A.(2014).analysed the major factors that affect the employee perception

towards the technology in banking sector. The study conducted was exploratory and
analytical in nature. The factors that impact the employee perception towards technology
was identified by carrying out an exploratory factor analysis. Adoption of technology and
technology enabled solutions had made a structural change in the work environment for
bank employees, who are required to reskill, upgrade and retrain in order to provide
efficient and quality services. It pointed out that the people, processes and technology are
the most supporting activities to create impressive value in the field of banking. The results
of the study showed that employees are on the opinion that the technology has reduced the
repetitive task and it also helps in addressing various issues such as security of networks,
banking applications. The factor analysis was done on various factors such as on
coordination, skills, management support, employee learning, IT investment, time
management and that analysis showed that the employees have a positive correlation
towards the technology.

7. Jain,M., & Popli,G.S.(2012).stated that the banking sector occupied an important and
significant role in the economic development in the Indian economy. With the emergence
of information technology into the field, banks became the financial hypermarket, with the
improvement of front end activities with the back end activities and able to achieve the
cutting down of transaction cost and provision of value added services to the customers. It
pointed out that the increased use of information technology had created a way for the
banking sector to go beyond their traditional operations. The study which was based on the
secondary data, tried to analyse the process of computerization of banking branches, the
various innovation emerged and the ATM strength in the public sector banks. With regard
to the computerization of bank branches, it was found that 97.8 % branches are fully
computerized and the various innovations took place in the banking sector includes the
NEFT, RTGS, card payments, ATM etc.It also analysed the strength of ATMs in the
banking sector and found that the 70% of the ATMs were in urban areas and the public
sector banks had more reach in rural areas. The study was concluded that .the information
technology in banking sector has helped the banking sector not only to redesign their
internal processes and activities but also to improve the products and services based on the
customer needs and requirements.
8. Uppal,R.K.(2011).analysed the performance of selected public and private sector banks in
terms of profitability and productivity in the pre and post age of e banking technology. It
revealed that at the period of 90’s ,many deficiencies and problems are suffered by the
banking sector and financial sector as a whole comprising of incurring losses, poor quality
of customer service, outdated work technology, unable to meet the challenges of a
competitive working environment. The Banking reforms were introduced in order to cope
up with these deficiencies and to promote overall development and to integrate with the
world economy. The study explained the various phases of banking reforms and also the
impact of technology on the bank transformation. In the study ratio analysis is used to
measure the performance of banks. The findings of the study showed that the productivity
in terms of labour and branch, showed a excellent trend of growth in post e banking period
as compared to pre e banking period and foreign banks are at the top position in terms of
labour and branch productivity. While analyzing the profitability of three sector banks,
foreign banks occupied the highest position followed by private banks. Public sector banks
were far behind the profitability of both foreign and private sector banks. It also pointed
out the various challenges faced by public sector and suggested how the public sector banks
can able to covert the emerging challenge into valuable opportunities with some care and
modifications.

9. Avasthi,G.P.,Sharma,M.(2000-01).discussed about the various digital products and

innovative services that are using in banking sector today and also it examined the potential
risks and challenges that the banking sector and its regulators, are facing from the
technological developments. The article analysed not only the impact of technology on the
retail banking industry but also the impact on the wholesale market of banking sector such
as foreign exchange market, the commercial paper market, the bond market. It stated that
the alternate delivery channels includes ATMs, Internet/Mobile banking, telephone
banking etc,.The study pointed out that the widespread adoption of alternate delivery
channels provides an opportunity to the private and foreign banks but it might be a threat
for the public sector banks. Its also mentioning the potential risks and challenges to the
different players in the banking industry. The risks to customers includes theft of cards,
threat to privacy, fraud, break down of electronic system, use of transaction related
information without customer consent and the risk to bankers includes fraud committed to
security breaches, security risks and large scale system breakdowns. In addition o these
risks to customer and bankers, there is systematic risk such as insolvency of issuer of e
money and social risks such as money laundering and tax evasion and threat of cyber
terrorism. The study concluded by stating some emerging roles for regulators in order to
minimize the risks in future, which includes to provide a legal framework for enactment of
laws for a speedy redressal, to establish a regulatory arrangements for reviewing the
 existing regulations in the light of upcoming developments, to implement an internal
vigilance system to deal with the security risks, to act as a facilitator by developing an
industry wide network of technology enabled delivery channels.

10. Joseph, M., McClure, C. & Joseph, B. (1999), analysed the impact of banking innovative
technology on the service quality using a importance- performance grid. The study pointed
out that, today, majority of the customers are preferred to use technology driven services
than that of a service from an employee and also stated that if the customers have more
control over the technology,then they had greater control over them.Inorder to analyze the
service quality, a six factor model consisted of convenience or accurancy,feedback,queue
management,efficiency,customization and accessibility were used. The six factor model
were further analysed using the four dimensions of importance-performance grid. The
findings of the study showed that, two factors (convenience and efficiency) falls under the
keep up good work quadrant of the grid and convenience and waiting time were selected
as the best and worst aspect of the electronic system of banking respectively. The study
was concluded by providing some suggestions to the banking sector, such as to make ways
to make the electronic banking services more accessible, ensure security in the transactions,
and develop electronic facilities which cater the needs of the elderly and the disables ones
too.

11. Scarbrough,H., & Lannon, R .(1988).studied the technological changes that must happen
in the business environment. It used a case study approach to explain the various
organizational and technical problems of managing and the developing the strategy for
technological innovations. It pointed out that the common strategy for managing the new
technological changes was firstly, the awareness of the top management about the strategic
implications of the technology and the incorporation of the various technological factors
to the strategic decision making process and secondly, the strategic response by the
formulation of a strategy for new technology which integrates the managerial functions to
the process of innovation. The case study revealed that the technological management can
be analysed by the organizational learning process, which explained the way in which the
organizations adapt to the changing needs by the new technological innovations. The
findings of the study stated that various roles and departments formed for the purpose of
managing the technology, acted as a catalyst force for improving the awareness about the
technology among the organisation and also to provide a perfect platform for giving a vast
clear view of the long term implications of the technological innovations.

Methodology
This study is an empirical study based on virtual banking and the introduction of virtual assistant
SBI – SIA, the features and the need of virtual banking and the introduction of virtual banking
services theoretically included in the study.

Data Collection

This study is an empirical study based on secondary source. Emerging Trends in the modern
banking system and the introduction of virtual assistant by the State Bank of India to assist the
banking customers to do the virtual baking is the theme of this study.

Study Design

This study is an explanatory study of modern banking developments especially virtual banking.
State Bank of India (SBI) is one of the Top 50 global banks and well on course to break into the
Top 30 in a few years. Introduction of virtual banking and the acceptance of virtual banking in
India is considered as a disruption in banking industry. This study is an empirical study based on
case analysis.

Tools for Analysis

Five metrics are considered as most important tools for the impact analysis of SBI- SIA. Number
of customers saved in first month, Interaction per second, Total Number of hours and Support
operation in a month are the key metrics used to analyse the impact of SBI- Virtual Assistant (
SIA). The following metrics values show the impact of virtual banking and importance of virtual
banking in India.

Emerging Trends in Banking

1. Robots:In 2016, ICICI Bank adopted Robots. Which processes about 20 lakh transactions
each dayICICI Bank's application robots have minimized response time to clients by 60%
and improved precision by 100%, strengthening the lender's productivity and effectiveness
tremendously.City Union Bank – Lakshmi (2016), Canara Bank – Mitra&Candi (2017),
and HDFC – Interactive Robotic Assistant are among the other major banks that have
deployed robots for banking tasks (2017). These robots are utilized for a range of functions,
including retail, whole-sale banking, currency, treasury, and international trade.
2. Machine Learning and Algorithm:On NiravModi fraud with PNB – PNB Said that it has
a zero tolerance to unethical practices with in the system and decided to deploy AI
algorithms for reconciliation of Accounts
3. Mobile App: Allahabad Bank has launched an AI-based app called "empower," while
IndusInd Bank has recently launched an Alexa skill called InduAssist, which allows bank
account users to execute financial and non-financial activities with Amazon's virtual
assistant Alexa
 4. Digital Branch – In March 2019, Bank of Baroda opened a hi-tech digital branch at MS
University campus in Vadodara, complete with innovative devices such as an AI robot
named Baroda Brainy and a digital lab with free Wi-Fi access.In India, there are 12 banks
that have received consistent media attention for their AI initiatives in recent years.To share
the AI system, the Banking sector in India should form a consortium. The cooperative and
regional banks will be ready to explore with AI at a lower cost and with more security as a
result of this. The emerging customer-based humanoid robots that might take over the task
of guiding clients through the banking process are the future of developing AI in the
banking sector.

STATE BANK OF INDIA

With over $630 Billion in assets and 500 Million customers, State Bank of India (SBI) is one of
the Top 50 global banks and well on course to break into the Top 30 in a few years. SBI operates
out of 26 countries with over 25,000 branches and 60,000 ATMs generating revenues close to $61
Billion. Over 70 Million customers actively use their Internet and Mobile Banking channels. About
45% of all transactions in India go through SBI’s payment gateways which is setup to handle
50,000 concurrent transactions.

Goals of implementing an Intelligent Virtual Assistant

• Reduce Opex Cost - Significantly reduce customer support cost through automation
• Increase Conversion - Enable seamless customer onboarding through AI Assistance
• Maximize Revenue Opportunities - Upsell/cross sell through AI-led product
recommendations
• Improve Customer Life-cycle Experience - Enable personalized, channel-agnostic
customer journey

SIA — SBI INTELLIGENT ASSISTANT.

State Bank of India (SBI) is currently beta-testing its intelligent assistant called SIA — SBI
Intelligent Assistant. SIA is a chatbot which is aimed at handling customer queries and help guide
them through the various retail products and services offered by SBI. SIA works on artificial
intelligence and is an effort by SBI to identify work processes that can be transferred to robots so
that human resources can be more creatively used.

The SIA chatbot has been developed by Allincall, a startup backed by IIT Bombay. It makes use
of machine learning and bot experience to be able to respond to customer queries.

The chat assistant, known as SBI Intelligent Assistant, or SIA, will help customers with everyday
banking tasks just like a bank representative, the company said in a statement
With SIA, the bank will reduce significant operational expenditure over time. Currently, SIA can
address enquiries on banking products and services. It is trained with a large set of knowledge and
is adept at answering frequently asked questions as well.

“SIA is a perfect example of ground-breaking banking application in Artificial Intelligence and

Conversational Banking. It will enhance customer service several notches above and interface’s
expertise in the conversational banking domain helped us build SIA as a superior chatbot in the
global banking space.”

SIA’s Impact- Analysis.

Five metrics are considered as most important tools for the impact analysis of SBI- SIA. Number
of customers saved in first month, Interaction per second, Total Number of hours and Support
operation in a month are the key metrics used to analyse the impact of SBI- Virtual Assistant (
SIA). The following metrics values show the impact of virtual banking and importance of virtual
banking in India.

Since launch, SIA has responded to millions of queries from thousands of customers. SIA is setup
to handle nearly 10,000 enquiries per second or 864 Million in a day. That is nearly 25% of the
queries processed by Google every day. The chat assistant would be available across multiple
customer touchpoints like mobile, IVR, SMS and social media platforms. "SIA" would also be
enabled to interact in most regional languages.

Findings

1. SIA is a perfect example of ground-breaking banking application in Artificial Intelligence

and Conversational Banking.
2. Total 2% savings in support costs over the last 6 months 28.8% of queries answered by
SIA helped SBI acquire new customers for the various banking products.
3. SIA is setup to handle nearly 10,000 enquiries per second or 864 Million in a day.
4. Nearly 25% of the queries processed by Google every day.
5. SIA assistant would be available across multiple customer touch points like mobile, IVR,
SMS and social media platforms.
6. SIA can be enabled to interact in most regional languages in India.

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