The year 2020 has brought many challenges in countries around the world and in various sectors. There has been a major shift in the ways money is spent, and the decline of human activity. For example, going to bank ATMs for cash. But, when looking at the broader business landscape, one can see little trace of positivity in the financial sector. This article will focus on the points of “How Artificial Intelligence can impact the Fintech sector?”
People who ignored the use of digital technology had no choice but to switch to online banking to carry out their daily tasks during the lockdown period. It was the period when technologies such as artificial intelligence and machine learning were redefining the ways of working in the financial industry.
Technology and tools have always been 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 part of our daily life, which thinks and acts better than humans. I hope you understood? We are talking about Artificial Intelligence and Machine Learning.
There was a time when machines with human intelligence were the subject of fantasy films like 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 financial industry moguls working with coders and software developers to develop applications.
Is AI reshaping the financial sector?
Yes, the year 2021 will see more AI applications in different ways than ever before. For example, it will be chatbots that will respond more to customer queries in banks and heritage institutions; 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 of adapting new technologies. Let us examine in detail how artificial intelligence assists the financial sector in the following paragraphs:
A. Decision making
Insurance companies and investment advisors, before introducing a new product or service to the market, may ask questions of AI platforms rather than customers. Platforms, loaded with customer data and having the ability to analyze as well as answer questions can give recommendations to fill gaps and doubts.
This will help insurance agents/advisors to have a clear view of customer expectations and decisions. They can then reframe the product or service based on the customer’s needs.
B. AI can detect online fraud and provide new insights into complaints management
Analytics tools used by banks to detect fraud have artificial intelligence applications to monitor a customer’s spending habits and inform about attempted fraud. It is impossible for a human to analyze a large amount of data within the given time 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. Some AI processes may change 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 sector.
C. Automated Virtual Financial Assistants
Investment organizations have always modified their technologies to adapt to recent trends. They use automated virtual assistants to call new customers, have a nice chat, educate them about new products, pros and cons, and ultimately entice them to invest. However, these machines also need information about an individual’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 ADVISORS”. These new applications are redefining how AI will redefine the Fin Tech sector.
Did anyone even imagine the success of the e-commerce industry before two decades? Maybe, only a few. Now it’s a 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 mankind. But it is also true that hackers use the same technology to break into e-commerce websites using chatbots.
Phishing has gained international recognition in recent years. You get a call from a scammer, then you get scammed out of your hard-earned money. Although this is a growing threat, banks have rolled up their socks to offer the solution also with the same technology. They have installed artificial intelligence applications on their servers to detect unfair spending activities, and if found, they can stop payments and send warning signals/messages to you and banks. Thanks to this method, banks around the world have saved customers’ hard-earned money.
E.Chatbots for CRM
It’s June 2021 and time has passed quickly, but many companies have still asked their employees to work from home. Today, the customer service industry is facing many challenges such as internet issues 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 adapt to give answers to even complicated queries. Additionally, unlike traditional methods, where IVR was the primary option, chatbots can now answer customer calls directly, ensuring brand loyalty and quick solutions.
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 blocking of the mobile connection can lead to a phishing attempt. To address this challenge, governments in all countries have implemented strict procedures for investigating KYC documents. But, it becomes difficult for a bank or an international institution to verify millions of KYC documents offline. However, an AI application can scan many documents, detect errors and submit an accurate report on time. This helps banks identify errors in a customer’s profile and take action.
G. AI can interact with customers on another platform
In 2020, Yes bank introduced the AI robot, LUIS (Language Understanding Intelligent Service) to respond to nearly 10,000 queries on Whatsapp. You can use this service to check account balance, request products and submit check book requests.
In the future, banks could have an AI platform that works in coordination with virtual assistants such as Alexa, Cortana and Siri.
H. AI and search engines
Are you surprised by the subject of search engines in this article? Yes? Please note that millions of people use voice assistants on their mobiles to open websites, perform tasks and much more. Thus, banks find it difficult to modify the content of their websites into long-tail keywords or phrases used by customers around the world. To be fair, many banks have already changed their web content based on the terms customers use to open their websites by voice commands on mobiles.
The future of artificial intelligence in the Fintech sector
According to industry experts, AI-powered robots are set to become the next customer service managers in banks. These robots can answer customer questions, guide them through various banking processes and forms, and are expected to reduce human labor by 20% 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 there. The companies listed below are just a few examples of how artificial intelligence is helping the FinTech industry (corporations 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 offers risk, compliance and client insights solutions for investment firms. Using cognitive capabilities, this platform helps identify customer behavior.
2. MICROSOFT CORTANA INTELLIGENCE SUITE
This AI platform helps small, medium and large financial companies gain insights into financial crime and analyzes the data used to improve customer relationships.
3. EINSTEIN SALES FORCE
This company helps financial advisors obtain information about a client’s financial situation.
4. ZEST FINANCE (LOS ANGELES)
The company’s own 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 detect customers who may have difficulty repaying loans. According to the company’s website, the platform has helped financial institutions reduce their losses by 25%.
5. SCIENAPTIC SYSTEMS (NEW YORK)
This subscription platform, similar to ZestFinance, gives information about customers applying for credit cards. They verify the buying behavior and interaction of the customer and then offer transparent results.
6. ALPHASENSE (New York)
Alphasense is an artificial intelligence-based search engine used by Fortune 500 companies and investment banks. It uses NLP or natural language processing to check keyword searches against news strings, research papers, deposits and online transactions to detect changes in financial markets.
7. KASISTO (nyc)
This company’s AI platform, KAI, is popular for improving customer experiences by providing options, solutions, and recommendations regarding financial markets.
I hope the above points provided valuable insight for the question – How can AI impact the fintech industry? Please note that the financial technology as well as the AI industry will always be constantly evolving. Let’s wait and watch!!