In banking, there are many time-consuming processes that are needed for the bank to offer its services, but also many time-consuming processes that are required for regulatory purposes.

All banks need to evaluate the credit risks for customers, for example, process transactions and so on. Many of these processes are oftentimes relatively similar or even almost identical, which means that they are, in general, easy to automate.

On top of that, the banking industry is competitive, as there are many large and small banks that compete for market share. Lowering expenses would help in offering better services to customers, e.g. by reducing the interest rate on loans they offer. Not surprisingly, since banks want to improve their efficiency, many of them flock towards AI in order to bring down their operating expenses.

Some of the largest banks employ AI in their operations already, including Bank of America (NYSE: BAC) with its Erica virtual assistant that uses technologies such as Natural Language Processing (NLP), or Citibank (NYSE: C) with its automated transaction papers analysis that helps them reduce operating expenses.

AI Banking Winners

Investors can benefit from the growth of AI in banking in different ways. While investing in banks that employ artificial intelligence gives investors exposure to this trend, banks often are lower-growth entities, making them less attractive for growth-oriented investors.

Some fintech companies with higher growth rates use AI as well, such as PayPal (NASDAQ: PYPL) or SoFi Technologies (NASDAQ: SOFI), which use AI for transaction analysis and fraud detection.

You can also invest in the companies that power the AI in banking trend, without being banks themselves: NVIDIA (NASDAQ: NVDA) is the clearest example of that, as it benefits from high demand for its data center chips.

After all, all the NLP and machine learning algorithms that banks use require massive computing power, and that means NVIDIA’s end market keeps growing. Its technological leadership should allow NVIDIA to benefit from broad growth in AI usage, including increased AI in the banking industry.

Other AI hardware companies that should benefit a lot from more and more banks using AI for more and more tasks include chip and hardware and infrastructure players, such as Broadcom (NASDAQ: AVGO) and Arista Networks (NASDAQ: ANET), which benefit from growing demand for data centers driven by increased AI use.

Investors can also choose among some of our Artificial Intelligence picks to benefit from increased Artificial Intelligence usage among banks and the finance industry.