Whether it’s a mega enterprise or just a budding one automation is the pressing priority for all, currently chatbot is the most trending technology for all of them and banking sector is no exception to it. With the intent to carter the needs of highly occupied current customers having resistance toward standing for long hours in queues, the banking industries are getting more customers oriented thus offering enormous digital platforms. The inclusion of applications like chatbots is undoubtedly a phenomenal initiative toward making banking services more effective. Artificial intelligence (AI) presents a wide range of opportunities and challenges that influence the banking sector's direction. Artificial intelligence (AI) has the potential to transform conventional banking procedures by allowing banks to simplify operations, improve client experiences, and make data-driven choices. On the other hand, the implementation of AI in banking also raises issues with data privacy, legal compliance, moral considerations, and possible employment market effects. The present study has been conducted to understand the architect of chatbot, use case of chatbots in banking sector and its application by selected Indian banks (both private and public). The study also identifies the challenges banks must encounter while implementing AI in their operations. Further, the paper recommends certain strategies which can assist the banks in navigating the challenges of AI implementation. The study concludes that chatbot in their current form is just adequate for handling basic and standard customer queries which reflect their inability to handle queries which require specialized knowledge and expertise.