Chapter 13: Role of AI and Technology in Retail Banking (JAIIB – Paper 4)
1. Which of the following is a key dimension of banking technology?
A. Traditional cash handling only
B. Customer relationship management only
C. Digital infrastructure, security, and customer service
D. Manual ledger maintenance
Banking technology includes digital infrastructure, security systems, and enhanced customer service mechanisms, which are core dimensions for modern banking operations.
2. How has AI impacted retail banking today?
A. By reducing the need for online transactions
B. By improving customer personalization and risk assessment
C. By eliminating regulatory compliance requirements
D. By increasing manual account processing
AI in retail banking helps personalize services for customers, enhances risk management, and automates routine tasks, improving efficiency and accuracy.
3. Which statement best describes the relationship between banking and technology?
A. Technology is only an optional tool for banks
B. Banks can function efficiently without technology
C. Technology replaces all human bankers
D. Technology is integral for operational efficiency, customer service, and innovation
Banking and technology are closely linked, as technology enables automation, better customer engagement, and innovative banking products.
4. When did banking technology in India start evolving significantly?
A. 1990s with computerization and ATMs
B. 1960s with branch expansion only
C. 1980s with passbook introduction only
D. 2000s with paper-based ledgers
Banking technology in India began evolving rapidly in the 1990s, with computerization of branches, ATMs, and the introduction of digital banking services.
5. What does “A New Era in Banking” primarily refer to?
A. Manual ledger keeping and branch-only transactions
B. Cash-only banking
C. Technology-driven services like mobile banking, AI, and online payments
D. Only credit issuance without technology
The “New Era in Banking” highlights digital transformation, including mobile banking, AI applications, and seamless online transactions.
6. Which of the following is an example of AI application in Indian retail banking?
A. Passbook printing at branches
B. Chatbots for customer queries and loan eligibility prediction
C. Manual cash counting
D. Paper cheque clearance only
AI applications in Indian retail banking include chatbots for customer support, predictive analytics for loans, fraud detection, and personalized financial advice.
7. Which of the following is a major challenge for Indian banks in adopting new technology?
A. Cybersecurity risks and data privacy concerns
B. Increasing the number of branch passbooks
C. Reducing online banking options
D. Limiting mobile banking to select customers
Indian banks face challenges like cybersecurity threats, high implementation costs, staff training, and regulatory compliance while adopting new technology.
8. What does technology in retail banking primarily enable?
A. Only manual transaction recording
B. Reducing customer services
C. Efficient customer service, digital payments, and product innovation
D. Slower banking operations
Technology in retail banking improves customer experience, enables faster digital payments, personalized products, and operational efficiency.
9. Which of the following is a benefit of technology adoption in retail banking?
A. Increased manual ledger maintenance
B. Faster transaction processing and 24/7 banking access
C. Limited product offerings
D. Reduced online services
Benefits of technology in retail banking include faster transactions, continuous banking access, improved accuracy, and personalized financial services.
10. Which technology is commonly used in retail banking for customer interaction?
A. Manual passbook updates only
B. Ledger entry machines
C. Paper-based transaction slips only
D. Chatbots, mobile apps, and AI-driven customer service platforms
Retail banks use chatbots, mobile applications, AI, and CRM systems to interact with customers efficiently and provide personalized services.
11. Which of the following best describes a challenge due to legacy systems in Indian banks?
A. Difficulty integrating new digital platforms with old banking systems
B. Easier adoption of AI services
C. Reduced need for cybersecurity
D. Faster implementation of mobile banking
Legacy systems make it challenging to integrate new technologies, increasing cost and implementation time for digital transformation.
12. Which of these is a direct advantage of technology for retail banking customers?
A. Longer branch waiting times
B. Limited access to banking products
C. Real-time transactions and convenient account management
D. Manual loan processing only
Customers benefit from technology through faster transactions, online account access, mobile banking, and improved service quality.
13. What is Artificial Intelligence (AI) in the context of retail banking?
A. Only automated cash counting machines
B. Technology enabling machines to mimic human intelligence for tasks like decision-making and customer service
C. Manual branch operations
D. Ledger entry automation only
AI allows machines and software to simulate human intelligence, supporting tasks like chatbots, fraud detection, and personalized banking services.
14. How does AI differ from traditional automation in banking?
A. Automation can learn and improve on its own, AI cannot
B. AI only performs repetitive tasks without decision-making
C. Automation predicts customer behavior while AI executes predefined tasks
D. AI can learn, analyze data, and make decisions; automation only follows predefined rules
Unlike automation, AI can analyze data, learn from patterns, and make decisions, whereas automation only performs repetitive tasks based on fixed rules.
15. Which of the following represents a milestone in the evolution of AI?
A. Introduction of passbooks in banking
B. Launch of ATMs only
C. Development of machine learning algorithms and neural networks
D. Manual ledger entry systems
The evolution of AI includes advances like machine learning, natural language processing, and neural networks that enable intelligent decision-making in banking.
16. What is a major factor driving the AI industry in India’s banking sector?
A. Increasing digital transactions and demand for personalized financial services
B. Reducing online banking
C. Limiting mobile apps to select users
D. Manual cash counting only
The growth of AI in India is fueled by the surge in digital banking, need for better customer experience, and AI-based solutions like fraud detection and chatbots.
17. Which application of AI is commonly seen in Indian retail banking today?
A. Manual account ledger updates
B. Paper-based cheque processing only
C. Chatbots, loan eligibility prediction, and fraud detection
D. Passbook printing only
AI in Indian retail banking is widely applied through chatbots for customer service, predictive analytics for loans, and real-time fraud detection systems.
18. Which is a key difference between AI and rule-based software in banking?
A. Rule-based software learns and improves on its own
B. AI can adapt and learn from data, rule-based software cannot
C. Both AI and rule-based software are identical in decision-making
D. AI cannot process customer data
AI differs from traditional rule-based software by its ability to learn from data, identify patterns, and improve decision-making over time.
19. What is a key application of AI in the Indian banking industry?
A. Manual passbook printing
B. Paper-based cheque clearance only
C. Fraud detection, customer service chatbots, and predictive loan analytics
D. Only ATM operations
AI is widely applied in Indian banking for real-time fraud detection, chatbots for customer support, and predictive analytics for credit and loans.
20. How are Indian banks leveraging technology today?
A. By avoiding digital platforms
B. By adopting AI, digital payments, mobile banking, and core banking solutions
C. By relying only on cash transactions
D. By reducing online banking options
Indian banks are increasingly adopting AI, mobile banking, digital payments, and integrated core banking systems to improve efficiency and customer experience.
21. Why is AI being increasingly adopted in the banking industry?
A. To increase paperwork and manual processes
B. To reduce online banking services
C. To restrict banking access to branch visits only
D. To improve decision-making, efficiency, and customer personalization
AI helps banks enhance decision-making, automate repetitive tasks, personalize customer services, and detect fraud efficiently.
22. Which of the following is a benefit of AI technology in banking and finance?
A. Increased manual ledger work
B. Real-time risk assessment and improved customer experience
C. Limited financial product offerings
D. Reduced online banking options
AI allows banks to assess risks in real time, detect fraud, automate services, and deliver personalized solutions, improving customer satisfaction.
23. Which AI application helps banks predict loan defaults and creditworthiness?
A. Manual passbook updates
B. Paper cheque processing
C. Predictive analytics and machine learning models
D. Traditional cash counters only
Predictive analytics and machine learning models are used by banks to analyze customer data and forecast loan defaults and credit risk.
24. Which of the following is a strategic reason for AI adoption in Indian banks?
A. To reduce digital services
B. To enhance operational efficiency and competitiveness
C. To increase branch-only transactions
D. To delay customer service responses
AI adoption helps banks streamline operations, reduce costs, improve service quality, and remain competitive in the digital banking era.
25. What is a customer-focused benefit of AI in retail banking?
A. Slower transaction processing
B. Reduced online access
C. Limited product recommendations
D. Personalized financial advice and 24/7 service
AI enables banks to provide customers with personalized advice, predictive recommendations, and round-the-clock service for improved engagement.
26. Which of the following is a primary application of AI in retail banking?
A. Manual cheque clearance only
B. Customer service chatbots, fraud detection, and personalized product recommendations
C. Passbook printing only
D. Manual account ledger updates
AI in retail banking is widely used for chatbots, fraud prevention, personalized services, and data-driven customer insights.
27. What distinguishes AI adoption in Indian retail banking?
A. Reliance on manual ledger systems
B. Reducing online and mobile banking services
C. Integration of AI with mobile apps, digital payments, and personalized customer services
D. Limiting AI use to ATMs only
Indian banks combine AI with mobile banking, digital payments, and customer analytics to enhance service delivery and efficiency.
28. What is one major challenge facing AI development in India’s banking sector?
A. Excessive automation with no regulations
B. Over-reliance on branch passbooks
C. Reduced digital payments adoption
D. Lack of skilled talent, high implementation costs, and data privacy concerns
Challenges in India include a shortage of AI-skilled professionals, high deployment costs, cybersecurity risks, and regulatory compliance issues.
29. Which of the following is a key benefit of AI in retail banking?
A. Slower transaction processing
B. Reduced customer access to banking services
C. Personalized banking services and automated decision-making
D. Increased dependency on manual processes
AI benefits retail banking by enabling personalized financial advice, predictive loan decisions, fraud detection, and automation of routine tasks.
30. How does AI enhance customer experience in Indian retail banking?
A. By increasing manual paperwork and branch visits
B. By providing 24/7 support, chatbots, and personalized recommendations
C. By limiting mobile banking features
D. By reducing digital payment options
AI enhances customer experience through round-the-clock support, chatbots, personalized recommendations, and seamless digital transactions.
31. What is a significant strategic advantage of AI adoption for Indian banks?
A. Increased manual ledger maintenance
B. Reduced digital engagement
C. Limiting AI to only branch operations
D. Improved operational efficiency, risk management, and customer satisfaction
AI adoption helps Indian banks streamline operations, improve risk management, and deliver better customer services, enhancing competitiveness.
