AI in FinTech drives innovation, leading to personalized, fast, and secure services with higher customer satisfaction and global reach
The financial technology industry, alias the FinTech industry, is characterized by a high degree of innovation within a complex ecosystem that includes, among others, banks, financial service providers, and startups.
In the recent past, the industry has also been relying on artificial intelligence (AI) and machine learning (ML) for strategic decision making, customer insights, understanding consumer purchasing behaviour, and improving the digital transaction experience.
There are various ways AI has affected the Fintech space both positively and negatively. Here we look at some of the use cases of fintech innovation driven by AI, and the main benefits fintech firms can gain from this technology.
As the number and complexity of cyberattacks increase, artificial intelligence (AI) is assisting under-resourced security management strategists in staying abreast of the latest developments.
AI technologies offer rapid insights to cut through all the clamour of everyday alarm, creating significant diagnostic capabilities that analyse massive quantities of information and highlight hidden patterns and anomalies.
Fraud is one of the most pressing problems the finance industry faces nowadays. Thanks to its ability to discern patterns and suspect behaviours, artificial intelligence is being used to spot fraudulent activities, questionable transactions, and generally offer a boost to processing sensitive financial documentation - all with a lower chance of security risk.
Identifying new fraud signals is where businesses see one of the highest rates of return.
Improved Customer Service
There are many use cases when AI can improve customer experience and customer service. A couple of examples include:
With the help of chatbots, some banking institutions can even grow their customer network. Many banking apps offer personalized financial advice to help users achieve their financial goals, track their income and expenses, and more.
This personalization is possible primarily due to AI-powered FinTech innovations. For instance, Bank of America offers an app that helps users plan their expenses via an AI-powered, personalized approach to each customer.
Risk score profiling
Categorizing clients based on their risk score is a vital part of the manager's routine. Or not. From now on, this task can be passed to AI algorithms.
Using Artificial Neural Networks (ANNs), developers can train technologies on the user's historical data and then classify their profile from low to high risk level. Technologies also can provide clients with service recommendations based on their risk score.
The real pain point of all financial companies, including fintechs, is compliance regulation. Financial services providers should act with regulations in mind - and not only existing ones but also considering what's coming ahead.
RegTech (Regulatory Technology) is a way to manage regulatory compliance with the help of AI algorithms. It is a complex term that includes client identification, transaction monitoring, regulatory analysis, and reporting.
User Behavior Analysis
Artificial Intelligence in FinTech can predict a user's behavior with the help of AI APIs, which can also be leveraged to banks' and FinTech companies' benefit. Let's say, for example, that the user requests data about their expenses in the last month - a single request. On the server-side, with the help of AI, you predict their follow-up request (e.g., income in the previous month) and provide this information in the same response. As a result, you minimize the number of requests and the load on your system accordingly. The user also benefits, as the system works faster if the predictive analysis is correct.
AI in FinTech drives innovation, leading to personalized, fast, and secure services with higher customer satisfaction and global reach. So artificial intelligence in financial markets is here to stay!