Artificial Intelligence (AI) is a wonder of science, and the financial world was one of the first to take notice of it. Although there is still a lot of room for innovation, some interesting uses of AI for FinTech have already been developed. This post is about how these uses are being implemented by startups and banks.
What are the potential benefits and uses of AI in FinTech?
- Accurate decision making: The management of financial decisions and data-driven services is essential in the finance industry. AI can be used to analyze data and queries in order to make recommendations. For example, for the case of insurance agencies, instead of human agents, AI can evaluate more accurate decisions while saving human time as well.
- Customer support: Chatbots can be used as personal financial assistants to solve customer issues and provide more efficient services. These solutions deliver human-like customer service at a low cost.
- Fraud claim management: Through the use of AI technology organizations can use anomaly detection to increase the rate of accuracy in credit card fraud detection and anti-money laundering.
- Insurance management: Management of insurance policies with the help of AI systems helps to better analyze the data, solve customer requirements, and utilize the crude information for more accurate decision making. AI can help customers understand the policies, requirements, and consequences of a given insurance plan.
- Security: Any hint of suspicious action, analysis of logs, and emails can be utilized by AI as a potential way to track down offenders and prevent any security leak.
- Wealth management of masses: AI can help manage the portfolios of customers and tabulate a pattern by taking the client’s account balance, lifestyle, risks, and past history of the returns on investments.
How is AI bringing changes in the banking landscapes?
AI has been able to quickly change processes within the entire financial world in the last few decades. Below are some of the most important changes brought by AI in the existing financial industry:
- After the advent of AI, banks saw a faster and more accurate evaluation and assessment of the customers at a very low price and manpower. As a result, credit scoring has become more efficient as compared to traditional credit scoring systems. The process is now more technology-driven and sophisticated, which makes it more accurate than manual handling. This helps banks distinguish between potentially risky applicants and borrowers who are creditworthy but fall short on extensive credit history.
- AI-run banking sectors tend to be more objective as they are not subjected to any biased decisions, as in the case of human management. For example, digital banks and their mobile apps use machine learning algorithms so that customers can use any device to analyze their eligibility for borrowing loans and other options without any human intervention.
- The financial industry requires highly mechanized and sophisticated security systems. AI is very helpful in the risk management of the security systems used in banks and financial institutions. Its highly advanced technology enables the management of both arrayed and unstructured data. As a result, AI allows for the evaluation of cases of past risks in order to compare them to present cases and identify any similar future issues. This reduces future security issues based on past experiences.
- After the introduction of AI in the financial sector, the cases of financial fraud have gone down considerably. AI enables fraud detection systems to analyze the behavior of users, their locations, sudden reckless buying, etc. It operates under the premise that certain behaviors indicate divergence from the regular pattern of use. Abnormal behaviors trigger the security mechanism. This is very successful in busting frauds, and it shows hints of a brighter future as more advances in technology and development potentially allow catching sophisticated criminals.
- Lastly, AI is also useful in preventing financial crimes like money laundering. It can help detect any suspicious activity and thus cut off the money used for illegal activities while helping run the required investigation. This is changing the way financial institutions and governments use technology to perform investigations.
AI has been a major disrupting factor within the financial world. As part of the process of digitalization, it is even creating a disruption in the modern world as a whole. It has changed some of the methods of working within the financial world in order to make things easier and more efficient in various fields. Financial technology companies are skilled players and they have good reasons to bet strongly on AI. Still, even though big players are investing heavily in it, its adoption in digital banks and startups is helping create competition by enhancing the customer experience, facilitating effective decision making, creating more secure financial systems, and helping guarantee an almost accurate future prediction of investment.
Aditya Sudheer works as a Growth Assistant at AirTract.Com, a social platform wherein people ask questions, get expert video consultation, and share knowledge and experience. He has a Bachelor’s Degree in Computer Science Engineering and has been working in the field of Digital Marketing for the past two years. He is also a voracious reader and a big sports fan.