Over the last decade, and especially since 2020, traditional financial services have been morphing into ‘Fintech’ with the help of disruptive technologies such as blockchain, the Internet of Things (IoT), and Artificial Intelligence (AI). AI is currently the biggest emerging enabler of the banking business and the financial industry in providing them with a means to meet the requirements of clients who want smarter, more convenient, and safer methods for accessing, spending, saving, and investing their money. Fintech apps have become the new norm, especially since the pandemic forced traditional banks to shut down for long periods.
Today, customers have a variety of options where they can compare financial services on their smartphones and make better decisions with less effort. In the near future, bank branches will become obsolete, and they will take on different customer service functions. This is why financial institutions are rapidly investing in research, development, and acquisition of AI-based fintech products. Tagging along this change in the industry, there has been a greater demand for every high-quality Artificial Intelligence Course and training program, especially the online ones.
Artificial intelligence and machine learning are not mere fads; they are here to stay. And they are slowly but surely altering the face of the financial sector. So, let’s take a look at what are the most popular applications of AI in Fintech, how you could capitalize on this emerging technology, and more.
Benefits of AI in Fintech
Artificial intelligence has helped financial institutions and companies streamline their processes, make better decisions, provide increased security to their clients, and much more. Let’s take a look at some of the major benefits of introducing AI in the financial industry.
Higher User Engagement
Artificial Intelligence solutions monitor app users, respond to client queries instantly (chatbots), and collect analytics data on user preferences and behavioral patterns.
Artificial Intelligence technologies enable fintech employees with routine tasks, such as answering common queries, categorizing clients, and monitoring financial transactions.
Artificial Intelligence in Fintech enables continuous payment monitoring and user verification. This overcomes countless security vulnerabilities that humans usually do not see.
Reduced User Support Cost
Artificial Intelligence and machine learning in Fintech have reduced the chance of human mistakes and, thereby, saving you money on user support in the long term.
Data-Driven Decision Making
Artificial Intelligence gathers documents, creates reports, and makes predictions to assist you in developing actionable business strategies.
AI Trends in Fintech
Below are some of the areas where Artificial Intelligence has revolutionized the fintech industry
Robotic Process Automation (RPA)
By utilizing a ‘smart chatbot,’ FinTech or Banking businesses are able to automate and streamline back-end office procedures from end to end.
RPA is typically used to automate the following tasks:
- Onboarding new customers
- Security checks
- Operations involving trade financing and loan application processes
- Inbound calls making routine queries like account statements and transactions
- Processing credit cards, account closures, and mortgages
RPA software enables banks to work more efficiently, rapidly, and cost-effectively.
Save Money and Resources
Fintech industries are saving billions of dollars in capital, labor costs, and other resources using AI-powered solutions. Additionally, AI saves banks money through personalized insights, in the middle office through anti-money laundering, and in the back office through credit underwriting. As a result, banks can offer much better deals to attract more customers with the money saved by deploying AI technologies.
Credit Scoring and Loan Prediction
Artificial intelligence helps financial institutions make better credit decisions by detecting trends in past data, such as the credit history of customers. This way, clients can be profiled easily by machine learning algorithms based on their risk scores. Thus, credit scoring is regarded as an area where AI has empowered financial technology development.
For Enhancing Security Features
Artificial intelligence has tremendously improved data security in the financial technology sector. One way they do this is through chatbots powered by AI that can help clients reset lost passwords and allow additional access. Another example of Artificial Intelligence boosting financial security is through features like speech, facial, and fingerprint identification, making it harder for hackers to discover sensitive financial institutions.
Keeping up with Artificial Intelligence and machine learning and investing in developing their capabilities guarantees that a financial firm has the best security available.
For Better Fraud Detection
Much of the AI venture-funding in the financial services industry is used to target fraud and cybersecurity. As millions of daily financial transactions occur in a bank every day, it is practically impossible to manually analyze each transaction for potentially suspect activities. Therefore, efficient AI systems that can monitor financial transactions in real-time, and discover abnormalities or strange patterns in a user’s spending habits, are proving to be game changers in Fraud detection capabilities.
For Improving Customer Service
Modern financial institutions must be accessible to their customers 24 X 7 to answer queries and ease transactions to avoid the risk of losing your business to a competitor.
Here, AI-powered chatbots, virtual assistants, and similar AI interfaces reduce the workload of customer care centers by handling basic inquiries and common user concerns. Thus, AI chatbots free up time for customer service agents to handle more complex issues.
Personalizing Banking Services
AI-powered technologies enable the personalization of services to thousands of customers resulting in increased client trust and brand loyalty. AI systems collect and evaluate customer data and use it to propose relevant pre-approved financial products and customized advice. Further, in the future, AI transcript analysis will be used to forecast a customer’s mood and guide agents on the best solutions to offer them.
5 Startups that use Artificial Intelligence (AI) in Fintech
We’ve compiled a list of emerging finance companies that have successfully implemented artificial intelligence in their operations.
Enova created the Colossus platform that uses artificial intelligence and machine learning to offer advanced analytics and technology to non-prime consumers, banks, and enterprises to support responsible lending. The platform resolves real-world issues without putting either the lender or the beneficiary in an untenable situation.
ZestFinance developed the Zest Automated Machine Learning (ZAML) platform, which is an AI-powered underwriting system to assist businesses in assessing borrowers who have little to no credit information or history.
Canoe is capable of quickly collecting and retrieving alternative investment data using APIs, AI, and advanced data science capabilities. They ingest, validate, and offer critical information to help financial institutions make credit-related decisions.
Kasisto created KAI, a conversational AI platform for the finance industry to improve customer experiences. KAI offers self-service options and solutions to clients and thereby helps banks reduce call center volume.
Vectra created an AI-powered cyber-threat identification and hunting tool named Cognito. Cognito automates threat detection, identifies hidden attackers, speeds up event investigations, and can even identify compromised data.
Wishfin shows the best financial strategy for customers to fulfill their wishes, whether it is through savings, investments, or borrowing. They analyze consumers, segment them using tech, and understand their credit histories by giving them free credit reports. Around 7 million customers have used credit reports from Wishfin. The company helps disburse about 100 million loans every year.
Future of AI in Fintech
As Artificial Intelligence becomes more widespread in the financial sector, experts believe that this will result in increased crossovers with other industries and, thereby, generate more opportunities.
However, the extent to which AI is employed in the business will depend on the amount of money invested by financial services firms in training their employees. Staying ahead of the AI wave offers technology professionals the opportunity to build new and more interesting careers over time.