FinTech is getting stronger throughout the current pandemic crisis. Many companies have been affected, but many more are quickly adapting to offer services for the world’s new reality. The industry’s most innovative companies had already been strengthening their ingenious business models with state of the art HiTech. This process has now been accelerated. In particular, the use of Artificial Intelligence (AI) and Machine Learning (ML) is redefining how many things are done within the industry.
As more financial activities are done through apps, these two technologies are opening up great opportunities for a lot of people. However, almost everyone thinks that AI and ML are only for big companies with experts and large pools of capital. Nothing can be farther away from the truth. FinTech companies large and small are using these technologies, paired up with powerful apps, for all sorts of purposes.
We’ve already discussed the differences between AI and ML, and also some of the uses of ML. In this post we discuss some of the most important ways in which FinTech companies are using AI and ML. Hopefully, you can get some inspiration from them for your business.
Improved Financial Decision Making
FinTech apps are developing new and interesting ways in which users can process information. Thanks to the power of data visualization tools, apps can transform complicated data into easy to digest insights. As a result, users can make use of complex information to improve their financial decision making.
Security & Fraud Detection
As digital transformation takes over the world, financial cybercrimes will also grow. The silver lining to it is that thanks to AI and ML, companies and users are now able to secure themselves and their accounts.
Cryptocurrencies and blockchain are often associated with financial cybersecurity. However, in the near future we will also associate AI and ML to digital security. Algorithms are capable of detecting suspicious activity, and even better, they can notify users. These technologies can continuously monitor unusual patterns, so there is no need to be vigilant 24/7. Users can keep track of everything that goes on behind their backs while being confident that their assets are safe.
There has also been a great impact on behalf of these technologies regarding the detection of other illegal activities like money laundering. Governments and other institutions have the power, thanks to AI and ML, to use an army of bits and bytes to trace corruption networks.
Investment funds have been using complex algorithms for a while now to develop robust forecasts and simulations. Thanks to this, the world of asset management has been able to restructure many of its processes and offer new services. FinTech companies have taken notice of this and are implementing these solutions into apps so that users can take advantage of them.
App users can now make important transactions directly from any of their devices. Most importantly, thanks to AI and ML, users have the choice to do so reducing the number of intermediaries.
Bots are one of the most famous AI applications. Although they have been around for some time, only recently have they started to get traction thanks to ML technology. We are now seeing the rise of potent chatbots that can interact with customers.
FinTech companies are using bots as a major channel to solve customer issues. Results have been impactful as chatbots allow companies to reduce costs and increase customer satisfaction.
As physical distancing becomes the new normal, financial institutions will opt more and more for this type of technology to solve customer issues. Brick and mortar offices are not expected to disappear anytime soon, but they will most likely be relegated for specific activities.
One of the most innovative ways in which AI and ML are being used is to reshape how insurance policies are evaluated. Because this industry is heavily driven by financial tools, FinTech apps are being used to determine risk levels. Companies can calculate what is someone’s level of risk through their activity.
This has been used with success by the auto industry. A combination of IoT technologies and FinTech app development has opened up for this industry the possibility to calculate a person’s risk level by assessing their driving skills through a mobile app.
This is probably the most obvious way in which FinTech companies are benefiting from HiTech. The world has seen a wave of money lending apps thanks to the possibility of using someone’s financial habits and credit exposure to calculate loans.
Loans through AI and ML can be done in a faster way while reducing inefficiencies. Some argue that this might even help customers by reducing biases that can occur through human decision making. Although this is true, the opposite, negative biases, can also occur. FinTech companies that use these mechanisms need to make sure that they have everything worked out, otherwise, they risk segregating an important pool of users from their services.
I’ve already mentioned how HiTech has been used by financial companies to make better forecasts. However, it is worth mentioning that this technology is now at the service of ordinary people like you and me.
Apps have the power to help users perform robust calculations on important matters like their own personal finances at a very low cost and in a personalized way. This helps users keep track of their spending and calculate whether they will meet their financial goals.
This leads us to the last item on our list. Although this might seem obvious, it is an important way in which FinTech companies are using AI and ML. The combination of these technologies, together with powerful apps, has given companies and users the possibility to personalize finances. What used to be a rigid industry is now breaking outdated stereotypes to deliver a great UX.
Wrapping It Up
Artificial Intelligence and Machine Learning are two potent HiTech tools that the FinTech industry is using for everyone’s benefit. At Koombea we expect their uses to increase in the coming years as technology evolves and new business models are created. This process will go hand in hand with the evolution of powerful apps. As HiTech evolves, so will apps.
If you think your FinTech app can benefit from implementing Artificial Intelligence or Machine Learning, hit us up. We can surely help you benefit from it. We have more than a decade of experience in both HiTech and FinTech app development.