Artificial Intelligence (AI) and its high-end subset Machine Learning (ML) are powering the world, and the FinTech industry is in the forefront using such advanced technologies. It is reported that 70% of stakeholders of the FinTech market are already using AI and MI, and the next 5 years is set to see further impacts on the way it operates.
At the base of the use of these technologies lies the ability to process huge amounts of data letting organizations increasingly use them for making decisions that positively impact their operations and growth. The use of powerful AI technologies has already led the FinTech open up several newer and better avenues. These advanced applications are changing complex information into simple insights letting companies improve their financial decision-making. As per a Forbes report, “Artificial intelligence will save the banking industry more than $1 trillion by 2030.”
Here are the most remarkable ways in which AI & ML are impacting the FinTech market.
Among the most important uses of AI in the banking industry is its ability to detect and stop fraud across multiple banking channels. Inadequate authentication and verification had previously led to banks losing colossal sums of money to fraudsters. Using AI-based applications lets banks check real-time data effectively in minimal time – a task that was earlier difficult to analyze manually. Also, detection of suspicious activities has become easier with effortless prediction of risk levels while any fraudulent activity is underway. Data stream from the users’ devices are analyzed by the applications, along with their online banking habits to recognize fraud or stop it from happening.
The investment sector is not just benefiting itself but also letting its customers make better investment decisions using AI. Powerful AI financial planning services have grown over the last few years managing more than $4 trillion of consumer wealth across the globe. Algorithms of these applications go beyond mere scrutinizes taking several factors into account to provide secure investment advices. Factors that they consider include customers’ budgets, financial goals, their spending habits, risk tolerance abilities, current market status and the predicted market to help identify the best asset allocation. Some of the higher applications even take care of complexities such as retirement plans and tax-loss harvesting to let customers meet their financial goals.
Another popular use of AI and Machine Learning is by the automobile insurance sector. It uses a blend of IoT and AI to calculate a person’s level of risk by analyzing their activities. Customers’ driving skill assessment using mobile app has become common among a lot of insurance sellers!
Using AI in digital payment systems makes the process friction-free without consumers having to encounter any point-of-sale (POS) in retail stores. Though relatively new, the system is gradually gaining a strong foothold among retail sellers. Using a combination of technologies such as geo-fencing, digital wallets, and digital cash, a business can track when you enter and leave a store. This way, customers can save their payment data with any retail business and enjoy a checkout-free shopping experience. Any purchase that you make will be automatically debited from your digital wallet or charged to any of the cards that are on file, without any waiting in lines or human intervention at a POS.
Machine Learning is becoming smarter by the day and its Neural Network aims at knowing intuitively how you’re going to spend your finances even before you actually do it! Sellers can identify this pattern using your online browsing behavior, and travel patterns to form tangible conclusions using the massive data that your mobile churns out every day. Technologies are being used to predict what you are planning to buy letting sellers personalize product offer with auto-pay digital payment options. All of it becomes hard to resist for most buyers as it offers the smoothest of consumer experiences!
Most FinTech companies are offering their users Chatbot assistance to help resolve issues and improve operational efficacies. These bots are helping organizations cut down on expenses while boosting consumer satisfaction. Most of these are ML solutions that offer automated customer support answer queries, and give information before channelizing calls to the physically working backend teams. The overall result is improved efficiency at lower investment inputs using AI-powered solutions.
Convolutional Neural Network is among the new kids on the block that are algorithms based on visual cortex, the smallest known human body cell that is sensitive to visual sense. These networks act as cells that are able to extract visual features such as end-points and corners along with oriented edges. According to this technology, the networks are able to detect individual spending data, latest transactions and also the person who has last used the credit card.
With the world going more and more digital, more innovative uses of AI and ML are in the offing. Analyzing data that is beyond human comprehension, AI solutions can increase business efficacy seamlessly in the FinTech market. It is already playing a major role in fraud detection, smooth wealth and portfolio management, and seamless digital payments. Financial institutions including banks are expanding their security network, and smoothing out processes with AI analytics that is growing smarter by the hour!