Understanding AI in banking.

What is AI in banking?

AI in banking is evolving from a supportive tool to a core strategic lever, driving enterprisewide transformation. AI enables better decision-making by stakeholders, helping organizations achieve transformative outcomes across key areas:

• Elevating human potential and productivity: AI helps amplify talent potential and boost productivity by automating repetitive tasks, augmenting human capabilities, and freeing professionals to focus on strategic, higher-value work. This shift is crucial for improving employee experience and increasing efficiency.

• Driving strategic growth: AI allows banks to improve strategic decisions by enhancing forecast accuracy and optimizing resource allocation through deeper, data-driven insights.

• Strengthening trust and compliance: AI aids in risk mitigation and governance, helping banks strengthen compliance by reducing the risk of bias in hiring, improving audit readiness, and enhancing policy adherence.

The evolution of AI in banking.

From the rigid if-then logic of 1980s expert systems to detect simple fraud patterns, banking technology has evolved to the adaptive machine learning (ML) algorithms of the 2000s. These systems could continuously learn from transactional data and automatically identify complex patterns without explicit programming.

This transformation represented a shift from systems that required human experts to determine all possible rules and scenarios. AI models are capable of discovering hidden correlations in vast datasets, effectively transitioning banking from reactive rule enforcement to proactive pattern recognition, with each iteration improving accuracy and performance.

Today’s banking landscape showcases several powerful AI applications:

• Gen AI creates high-quality first drafts and refinements of various content, such as job descriptions or financial reports 

• AI agents proactively manage complex compliance tasks with precision

• ML models help improve strategic decision-making by enhancing forecast accuracy 

These innovations are setting the stage for a future where AI becomes both a competitive advantage and the baseline expectation for all financial services.

AI in banking vs. traditional banking systems.

Banks implementing AI typically see increased efficiency and lower operating costs. Invoice automation, fraud detection, and customer service also improve compared with financial institutions that don’t use AI technology. Here’s how AI-powered banks stack up against traditional institutions:

The benefits of AI in banking.

AI doesn't just support growth—it's transforming financial services from the inside out.

Strengthening compliance with predictive risk management.

Financial institutions face numerous operational risks, including:

• Internal compliance violations

• Financial reporting errors

• Expense fraud

• Operational inefficiencies

AI mitigates such risks using advanced analytics to spot specific patterns and help reduce risk when these patterns are violated. AI systems excel at detecting internal financial anomalies by identifying unusual journal entries and preemptively flagging risks before significant damage occurs. These systems can also analyze financial data to improve audit readiness, providing continuous monitoring to catch discrepancies and ensure policy adherence.

Frictionless onboarding that builds loyalty from day one.

AI in banking and finance is speeding up the employee onboarding process. Training is streamlined to help ensure there are no gaps in employee knowledge, especially regarding industry compliance regulations. For example, AI reduces employee onboarding time while providing an engaging experience for new hires. In the long run, this can pay off in long-term employee retention.

Workday Skills Cloud automatically infers and suggests skills based on a new worker's information, and leverages this data to recommend personalized next steps, such as learning content or internal job opportunities. This shift helps reduce the administrative burden associated with onboarding and connects employees to their career development paths from day one.

Elevating the employee experience with intelligent personalization.

In a competitive talent market, employees expect the same personalized digital experiences at work that they enjoy in their personal lives. By embracing AI technologies, banks can create employee experiences that feel less like administrative tasks and more like a partnership. Smart tools like Workday AI agents help banks:

• Cut through the frustration of complex workflows—turning processes into conversations that flow naturally

• Play the role of a strategic partner that gently points out when budgets are at risk or recommends a new internal gig to help an employee grow

• Flag items requiring attention before they become compliance issues

• Reach out with career opportunities that feel like helpful suggestions rather than administrative noise

Safeguarding the bottom line with automated financial integrity.

Protecting the bottom line has long been a major priority for the financial industry. Traditional internal control methods are giving way to AI, which can offer greater efficiency.

AI capabilities can detect anomalies in real time through several methods:

• Journal Insights – Identifying entries that fall outside expected behavior to reduce manual review time

• Expense Protection – Automatically scanning receipts and identifying outliers to prevent erroneous or fraudulent reimbursement

• Pattern Recognition – Recognizing complex interrelationships between financial variables that humans might miss

Modern detection systems, such as the Financial Auditing Agent, can continuously monitor financial transactions and spot anomalies in future transactions. Since they also make data analysis easier, finance teams are more efficient and can focus on strategic initiatives. This helps strengthen compliance by identifying and reacting to risks faster than without AI assistance.

Challenges of implementing AI in banking.

Financial institutions face hurdles in deploying AI, including data governance requirements, concerns about security and privacy, and a lack of transparency.

Lack of AI model transparency.

The inner workings of AI algorithms often lack transparency, creating a problem when these systems make financial decisions. Users frequently question the rationale behind AI-driven outcomes and may be unwilling to accept automated judgments, reinforcing the need for a human-in-the-loop approach. This understanding gap undermines confidence among users, highlighting the necessity of building trust and engagement directly into the user experience. Users demand clearer explanations of how these systems reach their conclusions, as people will not use technologies they do not trust. Workday builds explainability directly into each AI feature to empower a diverse workforce to make more informed decisions.

Potential cybersecurity vulnerabilities.

The risk of malicious actors leveraging AI for sophisticated cyberattacks is growing as AI becomes integrated into cybersecurity. This growing risk can also leave financial institutions open to regulatory compliance issues. This underscores the need for additional cybersecurity measures to safeguard investors and consumers from evolving threats.

Workforce skills gaps and evolution.

AI's ongoing evolution highlights the need for continuous professional development to meet shifting labor market requirements and ensure employees can keep pace with rapid technological changes. Organizations must implement strategic workforce development initiatives that enhance existing skill sets and develop new competencies aligned with technological advancements.

Regulatory and ethical complexity.

Despite banks’ best efforts to prevent unfair treatment, bias can still creep in. It is important to note that no AI solution can be completely bias-free. Responsible AI (RAI) adoption is crucial. Tackling this ongoing issue means these institutions must regularly examine their blind spots and biases. They must then develop and implement practical fixes—whether through policy changes, algorithmic adjustments, or staff training—to lower these risks as much as possible.

How to implement AI in banking.

1. Data infrastructure readiness.

Not all financial institutions keep up with the latest technology, which often includes their hardware. Legacy ERP systems with siloed data lack the capacity to support real-time analysis. Implementing AI requires a unified intelligent data core that combines external and operational data to create a single source of truth. Make upgrades where needed, and then get ready to implement AI in the organization’s data infrastructure.

2. Stakeholder alignment.

Whether it’s AI in investment banking or general finance, institutions must have stakeholder alignment for effective implementation. This usually involves holding meetings and highlighting the key benefits of AI in banking. Visuals such as flowcharts and dashboards can help demystify AI for stakeholders unfamiliar with the technology. Industry experts familiar with AI can also help get all stakeholders aligned.

3. Leverage platform-based AI.

Rather than building models from scratch, leading institutions partner with cloud providers to leverage embedded AI. Solutions such as Workday democratize AI benefits, offering pre-built capabilities and AI agents that deliver rapid results without the heavy IT burden of custom model development.

4. Regulatory prep.

With platform-based AI, the focus shifts from training models to establishing governance. You can use your technology partner's responsible AI framework to ensure compliance, allowing your teams to confidently monitor transactions and mitigate risks within a secure environment.

5. User adoption.

Once AI capabilities are enabled through the cloud platform, organizations must prioritize change management and upskilling. This ensures staff can effectively collaborate with AI agents and tools, enabling them to move into higher-value work. Continuous learning is key, as these systems evolve.

How Workday supports AI transformation in banking.

Workday is a key enabler of AI transformation in banking. 

• Value-centric AI that optimizes operations and accelerates decision-making

• Talent retention through AI-powered career development and engagement

• Enhanced financial planning with predictive analytics and scenario modeling

• Extensible innovation using prebuilt AI APIs and our centralized platform

• Responsible AI that safeguards sensitive data and ensures adoption within your institution’s regulatory environment

Workday empowers financial institutions with smarter planning, improved compliance, and real-time insights.