The year 2020 brought many challenges in countries around the world and in various sectors. There was a great upheaval in the methods of spending money and a decrease in human activity. For example, going to bank ATMs for cash. But, when looking at the whole picture in business, small traces of positivity can be seen in the financial sector. This article will focus on the points of “How can Artificial Intelligence impact the Fintech Sector?”
People who shrugged off the use of digital technology had no choice but to switch to online banking to complete their daily tasks during the lockdown period. This was the period when technologies like Artificial Intelligence and Machine Learning redefined the ways of working in the Financial Industry.
Introduction
Technology and tools have always been a part of human life. From the day our human ancestors invented fire and the wheel to today’s sophisticated gadgets, technology has influenced our daily lives to the fullest. And yes, now, programs and applications have become a part of our daily lives, which think and act better than humans. I hope you got the clue? We are talking about Artificial Intelligence and Machine Learning.
There was a time when machines with human intelligence were the subject of fantasy movies like Terminator in the 1980s. But after four decades, the fantasy has become reality. When it comes to making use of AI by fintech companies, it’s encouraging to see fintech moguls working with coders and software developers to develop apps.
Is AI reshaping the financial sector?
Yes, the year 2021 will see more AI applications in various forms than ever before. For example, it will be chatbots that respond to more customer inquiries at banks and financial institutions; The AI will be used in fraud detection tools and KYC document verification. For wealth investment firms, technology can help assess an individual’s investment opportunities, produce investment portfolios, and reduce the risks involved in adapting to new technologies. Let’s see in detail how Artificial Intelligence is helping the Financial Sector in the following paragraphs:
A. Decision making
Insurance companies and investment advisers, before introducing a new product or service to the market, can ask questions of AI platforms instead of clients. The platforms, loaded with customer data and having the ability to analyze and answer questions, can provide recommendations to fill gaps and doubts.
This will help insurance agents/consultants to have a clear vision of the client’s expectations and decisions. They can then reformulate the product or service to suit the customer’s needs.
B. AI can detect online fraud and provide new insights for claims management
The analytics tools used by banks to detect fraud have AI applications to monitor a customer’s spending patterns and report attempted malpractice. It is impossible for a human being to analyze a large amount of data within the time frame and submit a report. But, the AI, due to its automation process, can not only detect the errors, but also give the result within the specified time. There are some AI processes that can be modified to detect new patterns in fraud detection cases. For claims, insurance companies use a mix of AI and ML technologies. A classic example of Artificial Intelligence impacting the Financial Sector.
C. Automated Virtual Financial Assistants
Investment organizations have always modified their technologies to follow recent trends. They are using automated virtual assistants to call new clients, have a nice chat, tell them about new products, pros and cons, and ultimately entice them to make an investment. However, these machines also need information about an individual’s personal financial portfolio, so they can sell the perfect stocks and bonds. Have you heard the new name that has been given to these Virtual Financial Assistants? It is about “ROBO ADVISORS”. These new applications are redefining the way AI will redefine the Fin Tech sector.
D.Security
Had anyone imagined the success of the e-commerce industry before two decades? Maybe just a few. Now, it’s a multi-billion dollar industry. With many e-commerce websites using augmented reality and virtual reality to attract more customers, industry experts are focusing more on online security. Yes, AI applications have definitely helped humanity. But it is also true that hackers are using the same technology to break into e-commerce websites through the use of chatbots.
Phishing has achieved international recognition in recent years. You get a call from a scammer and then they scam you out of your hard earned money. While this is a growing threat, banks have been striving to provide the solution with the same technology as well. They have installed AI applications on their servers to detect unfair spending activities and if found, they can stop payments and send warning signals/messages to both you and banks. Using this method, banks around the world have saved customers’ hard-earned money.
E.Chatbots for CRM
The month is June 2021 and time has flown fast, but still many companies have asked their employees to work from home. Now, the customer support industry has faced many challenges such as internet problems and less manpower. So companies saw a more forward-looking way to include AI chatbots in the CRM process. Recent CRM chatbots are highly developed and can be adapted to provide answers to even complicated queries. Also, unlike traditional methods, where IVR was the primary option, chatbots can now answer customer calls directly, ensuring brand loyalty and quick solutions.
F. Meet compliance guidelines
The world of cybercrime has made banks and financial institutions focus on factors such as KYC (Know Your Customer) documents. A simple change of mobile phone number or interruption of the mobile connection can result in a phishing attempt. To stifle this challenge, the governments of all countries have introduced strict procedures on KYC document screening. But it becomes difficult for an international bank or institution to verify millions of KYC documents offline. However, an AI application can scan many documents, detect errors, and send an accurate report within the time frame. This helps banks to identify errors in a customer’s profile and take the necessary action.
G.AI can interact with customers on another platform
In 2020, Yes Bank introduced the AI robot, LUIS (Language Understanding Intelligent Service) to answer almost 10,000 inquiries on Whatsapp. You can use this service to check account balance, order products, and submit checkbook requests.
In the future, banks may have an AI platform that works in concert with virtual assistants like Alexa, Cortana, and Siri.
H. AI and search engines
Are you surprised by the topic of search engines in this article? Yes? Then keep in mind that millions use voice assistants on their phones to open websites, perform tasks, and more. Therefore, banks are hard-pressed to change the content of their websites to keywords or long-tail sentences that are used by customers around the world. To be honest, many banks have already changed their website content to fit the terms used by customers to open their websites via mobile voice commands.
Future of Artificial Intelligence in the Fintech Sector
According to industry experts, AI-powered robots are expected to become the next customer service executives in banks. These robots can answer customer inquiries, guide them through various banking processes and forms, and are slated to reduce the human workforce by 20 percent by 2027.
The Fin Tech industry has always been at the forefront of including innovation and new technologies in its operations. And when it comes to using AI to improve processes and services, the results are plain to see. The companies listed 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 AI applications used in the financial industry
1. IBM WATSON PLATFORM
This AI platform offers solutions in Risk, Compliance and client information for investment companies. By making use of cognitive capabilities, this platform helps identify customer behavior.
2. MICROSOFT CORTANA INTELLIGENCE SUITE
This artificial intelligence platform helps small, medium, and large financial companies gain insight into financial crime and analyze data that is used to improve customer relationships.
3. EINSTEIN SALES FORCE
This company helps financial advisors obtain information about a client’s financial status.
4. ZEST FINANCES (LOS ANGELES)
The company’s own platform, known as ZAML or Zest Automated Machine Learning, tells banks about a borrower’s credit history or information. It analyzes thousands of data and then gives accurate results. In summary, the platform helps to detect clients who may have problems paying the loans. According to the company’s website, the platform has helped financial institutions cut losses by 25 percent.
5. SCIENTIFIC SYSTEMS (NEW YORK CITY)
This subscription platform, similar to ZestFinance, provides information about customers who apply for credit cards. They check customer spending behavior, engagement, and then deliver transparent results.
6. ALPHASENSE (New York)
Alphasense is an artificial intelligence search engine used by Fortune 500 companies and investment banks. It uses NLP or Natural Language Processing to check keyword searches against news feeds, research papers, presentations, and online transactions to detect changes in financial markets.
7. KASISTO (New York)
This company’s artificial intelligence platform, KAI, is popular for improving customer experiences by offering them options, solutions, and recommendations regarding financial markets.
conclusion
I hope the points given above have provided valuable information for the question: How can AI affect the fintech industry? Keep in mind that both the fin technology and the AI industry will always be in a changing mode. Let’s wait and watch!!