5 ways AI and Blockchain are disrupting banking: Part 1 - The EE

5 ways AI and Blockchain are disrupting banking: Part 1

Pradeep Makhija of Space-O Technologies

Artificial Intelligence, Machine Learning, Blockchain, Augmented Reality and Virtual Reality are no longer words thrown around just like that. They mean a reality that we are living in, says Pradeep Makhija, digital marketing executive, Space-O Technologies.

In fact, at this moment while you are reading this piece, you will find yourself surrounded by yet another remarkable way in which AI would have impacted your daily life. Yes from your grocery shopping to driving to the routine tasks of your life, AI has impacted almost every aspect.

“AI is probably the most important thing humanity has ever worked on.” – Sundar Pichai

It is not every day that you get to invent and innovate things using a technology that seemed far off not too long back. Considering AI is going mainstream, it is all too relevant to sit and think this over.

What all of us have to do is to make sure we are using AI in a way that is for the benefit of humanity, not to the detriment of humanity. – Tim Cook

AI alone may not be complete or, will not offer security. Consider incorporating AI with Blockchain to improve the overall technology offering for your business.

As Fred Ehrsam said, everything will be tokenised and connected by Blockchain one day. Yes, you cannot imagine a world now where you don’t have machines working on the paths designed by you offering the security through tokenised systems.

So many people have talked about all these technologies, and so much has been said, that it is time now for you to understand what they mean for us, and how we can improve the way we work with these technologies.

Among the many industries, banking has embraced this combination to improve its product offerings and gain a competitive edge. Here we will talk about how the AI-Blockchain duo will disrupt this industry, and what will be the result. However, before we begin, we need to understand what AI and Blockchain are.

Overview of AI & Blockchain

Artificial Intelligence is the technology that aims to improve machine thinking and work like humans. AI basically learns from the environment around them, and then acts accordingly.

Blockchain on the other hand impacts the transactions and makes it more secure and transparent. With decentralised systems at the core of this technology, not only are the transactions recorded, you will find that every part within the technology is available for complete view.

A combination of these two technologies will offer good insights, and will improve the capabilities of the system, while keeping it in full view of the end-user.

The users will know what is being done to the data provided by them, and will have a complete idea as to how the data is being used.

You now know how Blockchain and AI work. Let’s understand how they will impact the banking industry.

Ways in which AI & Blockchain are disrupting the banking industry

#1 Improving the overall security

Isn’t security everyone’s concern when it comes to banking and transactions? With the increase in the number of frauds in the system, and the manipulation occurring in the transactions, users don’t feel safe using a lot of the banking products, especially the new wallet systems.

Blockchain and AI in collaboration can make the customer feel at ease when completing the transactions.

Blockchain being a decentralised system, you will see that every transaction is recorded along the nodes. If a single node is changed, all the nodes are aware of the changes, and it is completely transparent. As a result, any frauds within the transaction cannot occur without the knowledge of the user.

AI can help identify the fraud and alert the user. AI works with algorithms that learn the usual behaviour, and identify any changes.

For instance, a simple use case would be the pin. The machine records the pin for the particular card. In case there is a pin that does not match the original pin, then the machine would send out a fraud alert.

In case, you have always been using the card for normal transactions, say a few bucks, and suddenly a high amount is paid using the card, then the machine will identify the same. It will send an alert to the user. Only when the user confirms, will the purchase be completed.

#2 Reliability of data

The different AI models that work in the bank are based on data that has been received from the user as well as other parties. It is important for the banks to acknowledge the data and validate it. however, it is next to impossible to validate all the data using the machines alone. That’s why you need to implement Blockchain along with AI. It will help in making the data more reliable and authentic.

For instance, let’s say you have a fingerprint scanner at your banks to authenticate the employee or other biometrics to authenticate the transactions. AI alone will not be able to validate the data. It can only detect and minimise fraud.

When you connect Blockchain, you will know exactly whose signature, biometrics or other digital assets it is. Any change to the digital asset will be immediately known, and you won’t need to assign physical resources for the same.

The author is Pradeep Makhija, digital marketing executive, Space-O Technologies

About the author

Pradeep Makhija is a digital marketing executive at Space-O Technologies, a mobile app development company. He likes to share his knowledge and experience with people around by writing articles related to mobile apps & new technology. In his spare time, Pradeep likes to explore and read more about the trends and needs of a mobile app in different sectors.

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