AI’s impact on the FinTech sector
What is the current state of AI in the FinTech Sector?
Intelligent computers, algorithms and dedicated AI systems are a fintech dream. Despite being in early stages of development, they are already making a huge impact in many corners of the sector. AI has taken the tech world by storm, allowing companies to improve efficiency, cut costs, and automate a variety of their processes to reduce the load of repetitive tasks for humans. AI-powered chatbots, specifically, are being used by companies, as virtual assistants, customer care representatives, marketing executives, and salespeople across both big and small companies across the globe.
What are the different types of AI and their applications?
There are 4 major areas where AI is going to make a game-changing impact in the fintech industry. The first is valuable insights that can accurately predict customer behaviour i.e. credit worthiness. Second is early detection and prevention of cybersecurity threats. With AI, fintech companies can build robust security systems into their solutions to detect threats, which are increasingly common in today’s digital climate. Third is visual identification and verification. AI could provide degrees of automation that were previously thought impossible, such as streamlining functions like account creation, loan and insurance origination and documentation. Last but not least are chatbots, increasingly employed across a huge range of industry sectors. Also, paired with a customer engagement platform, AI has the capacity to develop next generation chatbots that can intelligently answer customer queries, effectively reducing load from customer services departments. Gartner predicts that by 2018, more than 2 billion people will be regularly using conversational AI to interact with virtual customer assistants on smartphones and connected devices.
What are the critical considerations for implementing AI in FinTech?
Many experts believe that in the foreseeable future, machine learning algorithms and other AI technologies will require human oversight for finance services and data privacy. Sceptics question whether computers will follow the same standards and principles that humans are expected to follow in today’s environment. For some in financial services and technology, the answer does indeed boil down to how people program and oversee AI tools. It may automate and make faster certain decision-making for example, but that decision-making will reflect all the biases and mistakes of human society. Therefore, it is important to consider the ethical and moral implications that come with the development of AI.
What are the benefits of AI in FinTech?
As already mentioned above, AI is impacting fintech is numerous ways. The most noticeable ways which AI is improving fintech are:
• Increasing Security
• Reducing Processing Times
• Reducing Duplicate Expenses and Human Error
• Increasing Levels of Automation
• Offering Game Changing Insights
• Empowering Smaller Companies
• Balancing Consumer Budgets Based on Spending Patterns
• Chatbots in Financial Services
What are the popular use cases of AI in FinTech?
One of the most renowned banks of the U.S. is the Bank of America, and it is certainly taking full advantage of the AI-powered chatbots available in the financial sector. The organisation has recently introduced Erica, a voice-and-text empowered chatbot. Erica originated as an advanced virtual assistant to help clients make smarter decisions. Erica helped in sending notifications, suggesting ideas as to how a customer can save money, giving reports on their FICO score, and encouraging payment of bills within the banking application.
JPMorgan is also utilising bots, but rather than for client use, it is being employed to streamline its back-office operations. They recently launched COIN, a bot that can analyse complex legitimate contracts quicker and more proficiently than human lawyers. Since its launch a year ago, the bot has helped JPMorgan spare more than 360,000 hours of labour.
How can FinTech companies maximise the potential of AI?
UBS says AI could boost banks’ revenues by 3.4% and cut costs by 3.9% over the next three years. Artificial Intelligence is perhaps the best innovation that will go a long way in creating a smoother working ground for FinTech. This is an innovation that is responsible for cutting the instances of human error in business activities. It is just the right answer where millennials highly value transparency and convenience.