Agentic AI in Banking: A Quick Guide to Intelligent Automation

While artificial intelligence is already changing how traditional financial institutions operate, Agentic AI is the actual game-changer set to reshape the industry.

This is due to the fact that AI agents will not simply streamline processes or give suggestions like generative AI currently does, but will actually act independently in order to evaluate and execute complex tasks in real time.

How Agentic AI Works

Think of Agentic AI as having a digital worker that’s based on a reasoning engine, and is operating within tightly regulated boundaries, with set goals and rules.

This means that Agentic AI is a proactive force, rather than the reactive force that is GenAI. 

For example, an AI agent can be implemented to fully automate the onboarding of a new client. It can check the customer’s credit score and personal information, and then access the bank’s tool like CRMs or APIs to gather data, before filing the paperwork itself.

In a perfect world, this would leave human workers with much more time to handle the most complex tasks and strategies, with people only being alerted if the AI encounters an anomaly that it is not authorized to solve.

Why Financial Institutions Pursue Agentic AI

The banking sector is currently facing a number of issues that are hampering and over-burdening the system.

From volatile interest rates, miniscule margins and the rise of AI fraud, a number of traditional processes and structures within banking are quickly becoming obsolete.

For starters, banks have a major problem with the data they gather. Because these institutions handle an endless stream of legal contracts, PDFs, handwritten notes and recorded customer service calls, for example, they’ve long been swamped by the data and have not been able to use it to their advantage.

With Agentic AI, the banks will be able to use all this data, process it and apply it to a workflow, using all the previously unused or misused information into a valuable and actionable asset.

Another big issue that these digital workers can help alleviate has all to do with the speed of service, as banks and financial institutions have suffered due to their slow processes in recent years, with consumers seeking faster and faster services.

People simply do not want to wait for a week to get approved for a loan or for a bank to handle their dispute, and Agentic AI can process, assess and approve these requests in a single session.

The last issue that banks have right now has to do with the ever-increasing regulatory requirements like KYC (Know Your Customer) and AML (Anti-Money Laundering), which are not only growing more dense, but also vary geographically, so much so that employees are having major struggles trying to keep up.

Human errors in the compliance sector have already resulted in tens of billions of dollars in fines in the past decade, so you can imagine how much importance banks are putting on eliminating this issue. With Agentic AI, all the compliance documents and checklists can be done simultaneously, drastically reducing false positives and allowing human officers to focus on high-level investigative work in the sector.

Benefits of Agentic AI in Banking

There are a number of advantages that the implementation of Agentic AI can have, namely:

• Hyper-Personalization: While banks have long-claimed to customers that they offer personalized banking, the reality has been quite different. With Agentic AI, however, you can actually have an agent constantly monitoring your entire financial footprint in real-time, which can be highly helpful in a number of situations, both for personal and business customers. 
• Non-Stop Service: Agentic AI will move the entire banking industry toward real-time accounting, and away from monthly closes, quarterly reports and end-of-day reconciliations by auditing and working on data at the same moment it is generated. And while human workers have weekends off, the AI agents will work continuously so that by the start of the next work week, the busy work will already be finished.
• Operational Reliability: AI agents will not only work 24/7, but will also be incapable of experiencing fatigue, which is a natural part of the human working experience. If and when these agents prove more reliable than their human counterparts, we will see a massive increase in consistency and quality of work.

The Potential Risks to Consider

As you can imagine, the implementation of Agentic AI into the financial services market will require a complete rethinking of the risk management frameworks that these companies use right now.
The first and biggest potential risk comes from the fact that the financial sector is required by legislature to have a clear reasoning trail for every major decision, so a bank will have to explain each rejection done by AI agents in order to prove that the agents aren’t using biased or illegal data points. 

This issue has already led to the rise of Explainable AI, which requires agents to log all of their logic steps so such issues are averted.

Another issue that current AI solutions face has to do with hallucinating, which is a proven phenomenon that almost anyone dealing with generative AI services has already encountered. 

The digital agents in the financial sector will have to deal with this, and the current idea is to deploy secondary AI systems that will monitor the agent’s work to check for any inconsistencies and errors so they can be vetoed if they stray from the predefined risk thresholds and regulatory boundaries.

Lastly, the actual process of integration of Agentic AI into the current system brings a risk of system instability, especially in the initial transition phase. Having to plug such a new technology into the processes can be a huge risk, as the current infrastructure is fragile and is not as easy to replace, potentially leading to a high level of friction.

Final Words

Agentic AI is a powerful and game-changing technology that will not only analyze, but act independently, potentially providing invaluable benefits and improving the way the current financial system operates. Still, even with the huge number of advantages it can offer, this tech also carries with itself a new set of risks and challenges, so banks will have to tread very carefully as they transition into a new world.