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Artificial intelligence is considered one of the technologies that can fundamentally change industries. Banking is no exception. Artificial Intelligence in Banking refers to the application of artificial intelligence
technologies to enhance various banking operations and services, ultimately improving efficiency, detecting fraud, security, enhancing risk management, improving credit scoring, and customer experience. AI is transforming the banking industry by automating tasks, providing personalized services, and improving risk management.

Artificial Intelligence has become an integral part of modern banking systems across the globe
for automating customer service. In Bangladesh, the integration of AI is still at a nascent stage,
the banking sector in Bangladesh is undergoing artificial transformation, AI in a Bangladeshi
Bank e.g. BRAC Bank PLC (hypothetical pilot, yet typical of real efforts). BRAC Bank, Dutch-
Bangla Bank, and bKash have introduced chatbots within mobile apps and websites. These
chatbots address frequently asked questions, help customers check balances, guide them through
loan or account services, and reduce call-center workloads. While early versions rely on
predefined scripts, many are evolving into AI powered tools using natural language processing
(NLP) for increasingly human-like interactions. While Artificial Intelligence AI in Banking
offers significant potential, the lack robust ethical and regulatory structures poses significant
risks. It also raises critical governance, ethical, and regulatory questions, particularly in emerging
economies like Bangladesh where technological frameworks are still developing.

Key Drivers for AI in Banking:

Several factors are pushing Bangladeshi banks toward AI deployment: 1. Consumers, especially
urban millennials, expect real-time service, personalized offers, and seamless digital experiences
via apps and online portals. 2. Branch costs, manual processes, and staff constraints make
automation of repetitive tasks (e.g., document processing, data entry) crucial for profitability. 3.
Anti-money laundering (AML), fraud detection, credit risk assessment, all benefit greatly from
AI-based detection and predictive capabilities. 4. With over 160 million people and growing
mobile phone penetration, AI can help financial inclusion by enabling alternative credit scoring
and risk assessment for those without full credit history.

Fraud Detection:

The Bangladesh Bank and commercial banks face growing risks from financial crimes. AI-
powered anomaly detection systems analyze transaction patterns in real time-flagging suspicious
behavior, identifying money laundering rings, and preventing fraudulent transfers. AI driven
analytics can segment customers based on transaction history, demographics, and behavior.
Banks can then tailor loan programs, deposit schemes, insurance products, and digital offerings-
sending personalized notifications and offers via SMS, email, or mobile apps. This level of
personalization improves customer engagement and cross sells revenue.

Challenges of AI in Banking:

Despite strong promise, Bangladeshi banks face non-trivial hurdles in adopting AI. AI models
require large volumes of accurate, labeled data. Many local banks still rely on legacy systems
with inconsistent, incomplete data. Often, digitization only reaches parts of a branch network,
hampering AI training efforts. AI professionals-data scientists, ML engineers are scarce in
Bangladesh. Most available talent is concentrated in universities or large IT firms. Banks must
invest in capacity-building, training, or hiring costly international experts. While Bangladesh
Bank encourages innovation, clear regulatory frameworks for AI and data privacy are evolving.
Banks must navigate compliance, cybersecurity risks, and reputational concerns as models
collect, store, and process sensitive personal data. Ensuring fairness, transparency, and model
explain ability is key to trust and compliance.

Rule of Bangladesh Bank:

Growth of AI in Bangladesh’s banking sector does not happen in isolation. Several initiatives are
laying important groundwork. Regulators encourage technology-driven fraud detection and
compliance solutions. Bangladesh Bank, the central regulatory authority, should work
proactively to formulate guidelines that balance innovation with customer protection. Policies
should address data privacy, algorithmic transparency, cybersecurity, and accountability.
Additionally, banks should establish internal ethics committees to ensure AI applications remain
fair, non-discriminatory, and aligned with national development goals.

Conclusion:

AI in Bangladesh’s banking sector is an accelerant for innovation, inclusion, and efficiency. AI
can elevate Bangladesh’s financial system to become safer, smarter, and more inclusive for all.
Bangladesh to fully realize AI’s systemic benefits in banking, all stakeholders-banks, regulators,
technology innovators, educators, must work together to build a trustworthy, human-centered AI
ecosystem that uplifts the entire population.

The writer is an M.Phil. and a Ph.D. researcher at the University of Dhaka, currently serving as
an Evaluation and Documentation Officer at the Director General’s Secretariat, Bangladesh
Institute of Bank Management (BIBM), Mirpur-2, Dhaka.