Perhaps nothing embodies evolution as much as the financial sector, with the advancements that it has seen over the years. The introduction of digital banking has transformed the relations between banks and their customers for the better.
At present, digital banking, networking, and the internet make the core of every financial institution. Numerous retail banks all over the world have revolutionized into digital banks ruled by the trends of fintech, more specifically ai in fintech.
The Coronavirus pandemic has altered the way society functions and the digital medium has gained greater prominence. Ironically, the pandemic induced move towards digitization has only opened up a plethora of opportunities for the fintech industry to rapidly innovate.
The venture capital firm, Finch Capital, outlines in its recent report, how the fintech industry has become a boon for the banks, providing them an array of technologically powered solutions to serve the needs of both them and their customers.
From blockchain to mobile payments and crowdfunding platforms, this rapidly growing use of technology in finance has made the management of money effective and a lot easier than before. FinTech’s have completely changed the way people make transactions, handle and utilize their money.
Emerging technologies like machine learning, cloud computing, and ai in fintech are now ruling the preferences of customers, their behavior, and the way they manage their earnings. AI implementation has enabled fintech companies to resolve challenges pertaining to data analytics so that they can offer better services.
Here are the ways in which ai in fintech solutions are making way for the generation of better services and consequently greater profitability.
1. Digital Advisors
One of the fintech applications that is rising in popularity is the transactional bots that provide users with financial coaching services. It is not easy to comprehend the right use of savings, financial plans, and spending.
Anyone can gain from some assistance in this sphere. Digital financial advisors or assistants like Ella, created by Sun Life assist users in navigating various aspects of their insurance plans like benefits and pensions.
Developed using Natural Language Processing, a subset of AI, these assistants, according to the transactions between the users and their algorithm are able to recommend services to them.
2. Credit Risk Assessment
The Federal Reserve System in January 2020 placed consumer credit debt in the U.S at a whopping 4.2 trillion dollars. Credit risk is assessed according to customer data. That means AI applications have a huge scope in this domain.
The application of ai in fintech enables the lender to interpret the massive quantities of consumer data and as a result design a prediction model. It is certainly a better alternative than going in with credit scores and loan app reviews. An enhanced credit risk assessment is thus made possible which is directly linked to the allocation of more loans.
3. Better Search through Chatbots
One of the major problems in banking and finance is that users face a tough time wading through the data, trying to find a particular transaction. This problem can be solved through AI-enabled chatbots that are built on NLP.
It recognizes the requests related to every aspect of user account and transactions, thereby processing it and displaying the result within seconds. Thus, the application of ai in fintech immensely optimizes the search tasks.
4. Smart Threat Detection
As the technology evolves, so do cases of fraud and security breaches. The application of ai in fintech applications is proving to be the perfect solution to combat such sophisticated online frauds which the conventional rule-based systems cannot identify.
ML-based threat detection gleans the invisible yet implicit data linkages and as opposed to rule-based detection can automatically determine possible fraud cases. The real-time processing of all the data enables it to effectively determine and track any lurking threat.
5. Seamless Claim Processes
One of the most critical functions of any insurance company is the claims operations. However, bringing about accuracy in the claims workflow is a very laborious and challenging task. But here is where robotic process automation technology makes the whole process more streamlined.
AI-enabled bots, replete with features like image recognition, payout prediction, and threat detection brings forth an errorless and cost-efficient execution of the whole process. Form filling, submission, and customer service can all be digitized with a single bot.
6. Accuracy in Targeting Customers
Ai in fintech can help companies to sell their services to the right customers. Identifying suitable customers for a particular service is something that AI can accomplish efficiently. AI models analyze data pertaining to your existing customers and on the basis of their purchasing patterns, helps you to target them with personalized product recommendations.
These models can be developed through certain tools. Alternatively, you can also avail the services of an Artificial Intelligence Company to have one such solution developed for yourself. This cross-sell and upsell opportunities that ai in fintech provides to companies is one of its many advantages that need to be leveraged.
Final Words
There are many more use cases of AI than those described above. But they are enough to make anyone note the remarkable scope of Artificial Intelligence in the financial services sector through its integration with fintech technology.
Fintech organizations can benefit a lot in terms of reduced operational expenses, keeping cybercrime at bay, and enhancing the overall customer experience. One can surely conclude by saying that fintech technologies, integrated with Artificial Intelligence, are set to transform the banking processes by making them faster, efficient, and convenient.