In the past, the finance industry was largely operated by human intuition and knowledge. However, as data has exploded and new technologies become available, the finance industry is beginning to adopt AI for data management and analysis. The Fintech industry is all about using new technology to improve the accessibility, efficiency, and customer experience of financial services.
Nowadays, Artificial Intelligence (AI) is playing a crucial role in the financial sector, particularly in Fintech to help identify and prevent fraud through digital banking. This includes things like mobile banking, credit card banking, digital loans, buying and selling, and asset management. AI can figure out the customer’s typical behaviors by observing how they analyze their transactions.
For instance, in May 2022, Brightwell Payments, Inc., a financial services company that specializes in the development of financial solutions to securely transfer money anywhere in the world, announced the launch of ARDEN, an AI-driven risk-detection tool that helps fintech protect its cardholders and their financial resources. Hence, banks across the world are using AI-powered solutions to enhance their safety and AI provides banks with the advantages of digitization.
According to the latest report studied by Allied Market Research, the global AI in Fintech market is predicted to showcase a remarkable CAGR during the forecast period.
Artificial Intelligence is revolutionizing the future of the Fintech industry
The use of AI in the Fintech industry opens new opportunities for financial institutions to support their processes and improve their operations. AI’s ability to process vast amounts of data swiftly allows Fintech companies to keep a finger on the industry’s pulse.
Market trends, customer sentiment, and emerging risks are all within AI’s purview. Armed with this information, financial institutions can make better-informed decisions, whether it’s adjusting investment portfolios, setting interest rates, or developing new financial products.
Some of the opportunities are mentioned below:
Enhance customer experiences:
AI-driven systems enable financial institutions to gain a deeper understanding of their customers and their requirements. By using AI to analyze customer information, companies can offer personalized services and financial products that better reach the needs of individual clients.
AI algorithms analyze vast datasets, identifying patterns in customer behavior and preferences. This information is then leveraged to offer tailor-made solutions, from investment recommendations to loan options. The result? Improved customer experiences and higher retention rates.
AI and Fraud Detection:
AI systems can detect fraudulent transactions by spotting discrepancies and anomalies. They can recognize patterns of behavior that deviate from the norm, immediately raising red flags. This level of vigilance is crucial in the world of finance, where security and trust are paramount. The constant evolution of fraud tactics requires a dynamic and adaptable solution, which AI provides.
Increased efficiency:
Artificial Intelligence can automate tiresome and time-consuming processes, including data entry and fraud prevention, allowing employees to dedicate their time to more complex and valuable tasks. This can result in improved productivity, decreased expenses, and faster response times.
Enhanced decision-making capabilities:
AI-powered systems can assist financial institutions in gaining more precise and timely insights, allowing them to make better-informed decisions. By leveraging AI to analyze data across multiple channels, companies can better understand market dynamics, customer needs, and potential risks.
From Manual to Automated:
Before AI, many Fintech processes relied heavily on manual input and verification. This was not only prone to errors but also consumed a significant amount of time and resources. AI has changed the game. For instance, chatbots can handle routine customer queries, leaving human agents to deal with more challenging issues. This shift to automation results in improved productivity, decreased expenses, and faster response times.
Key developments in the industry
To further underscore the significance of AI in Fintech, it’s crucial to examine key developments and major players in the industry. The major vendors in the global AI in Fintech market include Cognizant, IBM Corporation, FICO, Google, Microsoft Corporation, and Intel Corporation. To increase their market strength, these companies are involved in strategic partnerships, strong research and development (R&D), and inventing novel technologies.
For instance, IBM Corporation signed an Original Equipment Manufacturer (OEM) contract with Fenergo in April 2020. Fenergo is a provider of client lifecycle management (CLM) solutions and customer journeys for financial institutions based in Dublin, Ireland.
On the other hand, Temenos, a banking software company based in Geneva, Switzerland, in April 2020, announced the launch of eight new software-as-a-service (SaaS) propositions leveraging cloud technologies and advanced explainable artificial intelligence (XAI) to assist financial institutions and banks in managing their imminence response to the coronavirus pandemic.
Furthermore, in February 2023, Baiduri Bank, in Brunei decided to partner with Singapore-based SaaS fintech finbots.ai to modernize the Bank’s credit risk management with AI. Finbots.ai claims that its AI credit modeler, creditX will enable the Bank of Baiduri to design and implement top-notch credit scorecards faster and cheaper than ever before. This will reduce credit risk, improve efficiency, and flexibility for retail and SMEs, and accelerate the bank’s campaign for financial inclusion for underserved credit markets.
In conclusion, Artificial Intelligence in Fintech can transform the way financial institutions manage and analyze data, enhance productivity, prevent threats, and deliver superior financial services to their customers. The potential for its application is immense and its benefits are momentous. As the financial sector continues to develop, AI is set to revolutionize the management of finance of the future.
About the Author: Harshada Dive. Content writer at Allied Analytics.
Harshada Dive is an engineer by qualification. She has previous experience working as a customer service associate. As an associate content writer, she loves to experiment with trending topics and develop her unique writing skills. When she’s not writing, Harshada enjoys gardening and listening to motivational podcasts.
