The year 2020 brought many challenges in countries around the world and in different sectors. There was a major upheaval in the methods of spending money and there was a decline in human activity. For example, going to an ATM for cash. But if you look at the whole landscape in companies, you see few traces of positivity in the financial sector. This article will focus on the points “How Artificial Intelligence Can Impact the Fintech Sector?”
Those individuals who abhorred the use of digital technology during the lockdown period had no choice but to turn to online banking to carry out their day-to-day tasks. This was the period when technologies such as artificial intelligence and machine learning redefined the way of working in the financial industry.
Technology and tools have always been part of human life. From the day our human ancestors invented the fire and the wheel to today’s advanced gadgets, technology has fully impacted our daily lives. And yes, now programs and applications have become part of our daily lives, which think and act better than humans. Hope you got the hint? We are talking about artificial intelligence and machine learning.
There was a time when machines with human intelligence were the subject of fantasy films such as Terminator in the 1980s. But after four decades, the fantasy has become reality. When it comes to the use of AI by fintech companies, it is encouraging to see finance industry moguls working with programmers and software developers to develop applications.
Is AI changing the financial sector?
Yes, the year 2021 will see more AI applications than ever before in a variety of ways. For example, it will be chatbots answering more questions from customers in banks and wealth institutions; AI will be used in fraud detection and KYC document verification tools. For investment firms, the technology can help evaluate an individual’s investment opportunities, build investment portfolios and mitigate the risks associated with adapting new technologies. Let’s take a detailed look at how artificial intelligence is helping the financial industry in the following paragraphs:
A. Decision Making
Before introducing a new product or service to the market, insurance companies and investment advisors can ask questions of AI platforms instead of customers. The platforms, loaded with customer data and with the ability to analyze and answer questions, can make recommendations to fill the loopholes and doubts.
This will help the insurance agents/advisers to get a clear picture of the customer’s expectations and decisions. They can then tailor the product or service to the customer’s needs.
B. AI can detect online fraud and provide new insights for claims management
The analytical tools used by banks to detect fraud have AI applications to monitor a customer’s spending habits and inform malpractice attempts. It is impossible for a person to analyze and report a large amount of data within the deadline. But, due to the automation process, AI can not only detect the errors but give the result within the specified time. There are some AI processes that can adapt themselves to detect new patterns in fraud detection cases. For Claims, insurance companies use a combination of AI and ML technologies. A classic example of artificial intelligence impacting the financial industry.
C. Automated Virtual Financial Assistants
Investment organizations have always adapted their technologies to recent trends. They use automated virtual assistants to call new customers, have a pleasant conversation, inform them about the new products, the advantages and disadvantages, and ultimately entice them to make an investment. However, these machines also need information about a person’s personal financial portfolio so they can sell the perfect bonds and stocks. Have you heard the new name given to these virtual financial assistants? It’s “ROBO ADVISERS”. These new applications are redefining the way AI will redefine the Fin Tech sector.
Could anyone have even imagined the success of the e-commerce industry before two decades? Maybe, just a few. Now it is a billion dollar industry. With many e-commerce websites using Augmented Reality and Virtual Reality to gain more customers, industry experts are focusing more on online security. Yes, AI applications have certainly helped humanity. But it is also true that hackers use the same technology to break into e-commerce websites by using chatbots.
Phishing has gained international recognition in recent years. You get a call from a scammer and then your hard-earned money is swindled. While this is a growing threat, banks have pulled up their socks to offer the solution with the same technology as well. They have installed AI applications on their servers to detect dishonest spending activities, and if found they can stop payments and send alerts/messages to you and the banks. Banks around the world have saved hard-earned money from customers through this method.
E. Chatbots for CRM
It is June 2021 and time has passed quickly, yet many companies have asked their employees to work from home. Now the customer service industry has faced many challenges such as internet problems and less manpower. So companies saw a more prospective way to incorporate AI chatbots into the CRM process. The recent CRM chatbots are highly developed and can adapt themselves to answer even complicated questions. And unlike traditional methods, where IVR was the main option, chatbots can now also answer customer calls directly, ensuring brand loyalty and fast resolutions.
F. Meets compliance guidelines
The world of cybercrime has caused banks and financial institutions to focus on factors such as KYC (Know Your Customer) documents. A simple change of mobile number or loss of mobile connection can result in a phishing attempt. To meet this challenge, governments in all countries have introduced strict procedures when examining KYC documents. But it becomes difficult for an international bank or institution to verify millions of offline KYC documents. However, an AI application can scan many documents, find errors and submit an accurate report within the deadline. This helps banks identify errors in a customer’s profile and take the necessary action.
G. AI can communicate with customers on another platform
In 2020, Yes Bank introduced AI robot LUIS (Language Understanding Intelligent Service) to answer nearly 10,000 questions on WhatsApp. You can use this service to check account balance, request products, and submit checkbook requests.
In the future, banks may have an AI platform that interoperates with virtual assistants such as Alexa, Cortana, and Siri.
H.AI and search engines
Are you surprised about the topic of Search engines in this article? Yes? Then keep in mind that millions of people use voice assistants on their mobile phones to open websites, perform tasks, and more. So banks have a hard time turning the content of their websites into long keywords or phrases that are used by customers all over the world. To be fair, many banks have already adapted their web content to the terms that customers use to access their websites using mobile phone voice commands.
Future of artificial intelligence in the fintech sector
AI-powered robots are expected to become the next customer service executives at banks, according to industry experts. These robots can answer customer questions, guide them through various processes and banking forms, and will reduce the human workforce by 20 percent by 2027.
The Fin Tech industry has always been at the forefront of incorporating innovation and new technologies into their operations. And when it comes to using AI to improve processes and services, the results are there to be seen. The companies below are just a few examples of how artificial intelligence is helping the FinTech industry (companies and financial institutions) to provide the best service to customers.
Popular artificial intelligence applications used in the financial industry
1. IBM WATSON PLATFORM
This AI platform provides Risks, Compliance and Client Insights solutions for investment companies. By using cognitive capabilities, this platform helps to map customer behavior.
2. MICROSOFT CORTANA INTELLIGENCE SUITE
This AI platform helps small, medium and large financial companies gain information about financial crime and analyzes data used to improve customer relationships.
3. EINSTEIN SALES POWER
This company helps financial advisors get information about a client’s financial status.
4. ZEST FINANCE (LOS ANGELES)
The company’s proprietary platform, known as ZAML or Zest Automated Machine Learning, informs banks of a borrower’s credit history or information. It analyzes thousands of data and then gives accurate results. In short, the platform helps to detect customers who may face problems in repaying the loans. According to the company’s website, the platform has helped financial institutions cut their losses by 25 percent.
5. SCIENAPTIC SYSTEMS (NEW YORK CITY)
This underwriting platform, similar to ZestFinance, provides information about customers applying for credit cards. They monitor customer spending behavior and interaction and then provide transparent results.
6. ALFASENSE (NYC)
Alphasense is an AI search engine used by Fortune 500 companies and investment banks. It uses NLP or natural language processing to check keyword searches with news outlets, research papers, filings and online transactions to detect changes in financial markets.
7. CASHIER (nyc)
The company’s AI platform, KAI, is popular for improving customer experiences by providing them with options, solutions, and recommendations related to financial markets.
I hope the above points have provided valuable information for the question: How can AI impact the fintech industry? Keep in mind that both the fintech and AI industries will always be in ever-changing mode. Let’s wait and see!!