FinTech is a telescope word formed by the combination of two words – Financial and Technology. It refers to any business in the finance sector that makes use of technology to improve or automate financial services and processes being offered to customers. The use of AI in finance has already been embraced by several banks around the world. The application of AI in banking is helping banks identify fraudulent activities in the digital channels and stop them from happening.
FinTech has grown substantially in the last few years. Several companies have already embraced the power of artificial intelligence for FinTech. The traditional banking sector has seen what Artificial Intelligence for FinTech is really capable of. Banking companies have come up with their own novel and innovative solutions that make use of Artificial Intelligence, Machine Learning, Natural Language Processing (NLP), etc. to reduce the cost and address the pain points of customers during their journey.
- More than 70% of FinTech companies are already using artificial intelligence, despite it being tagged as a future technology.
- It is expected that AI in FinTech will dominate the market by the year 2025.
- Blockchain technology is already being used by 20% of FinTech businesses across the globe making it clear that blockchain has become a reality.
Benefits of using AI in finance
The use of AI in finance offers a wide range of benefits. These include:
Improved financial decision making
- The use of AI in finance offers organizations a lot of valuable data and information using which it can make data-driven decisions.
- Stakeholders and banking experts will ask the right set of questions to intelligent machines rather than human beings.
- Machines powered by the latest and innovative technologies like AI, machine learning, data science, and visualization tools will analyze the data and come up with a certain set of recommended results.
- The results obtained by the use of AI in finance will help stakeholders and the management take better and quick decisions.
- Also, the use of AI in finance can help customers improve their financial decision making based on key digestible insights provided to them through various AI powered applications.
Improved customer support
- Ever heard about chatbots and virtual assistants? These are nothing but the most popular and widely used applications of AI.
- The use of AI powered chatbots and smart assistants can help in providing answers to the questions of customers.
- The use of AI in banking as well as FinTech are helping companies resolve customer issues much faster than before.
- The use of AI-powered bots can provide immediate response to customers. They can also handle numerous customer requests.
- Many FinTech companies globally are using AI chatbots to reduce costs, improve customer support, increase customer satisfaction, and an effective channel to handle customer issues.
Forecasting in financial services
- Predictive analytics plays a key role in financial services being offered to customers.
- The right forecasting can positively impact the sales, revenue generation, and optimization of resources.
- It can act as a potential game changer for FinTech companies by improving business operations, key internal processes, and moving ahead in the competition.
- Analytics and insights help FinTech companies and banks to collect valuable data and analyze it to come up with customized solutions for each customer.
- Predictive analytics offer predictive insights on preventing possible bad loans to customers and calculating the credit scores of people.
Robust security and fraud detection
- The success of AI in the fintech and banking industry is mainly due to the powerful security it offers.
- As we live in the world of digital transformation, where all transactions are taking place digitally, the use of AI and ML help customers and FinTech companies to secure their accounts.
- The algorithms in AI are capable of detecting suspicious or fraudulent activities to notify customers immediately.
- AI can track and monitor unusual activity patterns, thus immediately alerting the users.
- Not just fraud attempts, AI can also help to detect money laundering activities taking place.
Future payment technology
AI is said to be the future payment technology.
In the future, the use of AI in offering financial services would mean that you can experience a completely seamless, frictionless, and contactless check-out experience at any brick and mortar store, or at any retail store where you find a point-of-sale (POS) machine at present.
When you enter the store, you will be immediately recognized by the retailer through your smart devices.
Any item you pick up from the store and the amount will automatically and immediately be debited from your digital wallet. This means you can directly walk out from the store without having to wait in the queue.
The use of AI in finance is witnessing a tremendous surge. The use of AI in finance will surely go a long way in transforming financial services and payments. AI has the capability to power financial services being offered to customers.