A series of technological innovations have emerged to disrupt traditional financial services; mobile payments, money transfers, loan management and even asset management.
Collectively, they are termed as “FinTech” and have come through as agile startups that seek to recreate the arena that is in financial institutions. Financial institutions exploit the idea of FinTech behind the scenes of their production, and most can give testimonies on how it is revolutionizing their relationships with their clients.
AI in FinTech
Artificial Intelligence is perhaps the best innovation that will go a long way in creating a smoother working ground for FinTech. This is an innovation that is responsible for cutting the instances of human error in business activities. It is just the right answer where millennials highly value transparency and convenience.
From research conducted by Gartner, in two years, a fifth of citizens in developed nations will have taken advantage of AI in their daily tasks.
Features of Artificial Intelligence
Basically, Artificial Intelligence works to;
- automate processes
- mimic the human brain
- learn by interacting with the environment using a neural network
- learn using synthesized data in the absence of real historic data
- account for uncertainty (Bayesian approaches) using deep-learning models
- using chat-bots as virtual assistants and receptionists of companies
- performing tasks that somehow seemed vigorous for human employees.
Applications of AI in FinTech
AI applications in FinTech will ensure better functionalities, and will even work to change it. It can be integrated with FinTech in the following ways;
Minimizing processing times
Processing of receipts and other financial documents is undoubtedly the most tedious and time-consuming task for banks and other financial institutions. AI can be used to cut down the time used in half and will also reduce the resources used in the entire process.
Increasing automation levels
AI will ensure fast, efficient and accurate generation of expenditure reports.
Introducing game-changing insights
Such insights will help financial institutions accurately predict customer behavior. For instance, an artificial intelligence that analyzes a client’s past behavior and advise on their creditworthiness in case of loans.
Motivating smaller companies
AI tools are increasingly becoming easily accessible and affordable thus leveling the playing field for both big and small companies. Startups can, therefore, compete favorably in markets once dominated by the big fish.
Advising clients on their spending patterns
Not only is AI going to be useful to FinTech companies, but it will also work for the benefit of customers. Personal financial applications use the technology to help individuals balance their budgets according to their earnings and spending routines. In doing this it will help them cut costs and raise their bottom line.
Lowering the cost on redundancy and human errors
Activities such as accounting are usually prone to human error. However, AI tools reduce such errors that may cause a substantial loss.
Using chat-bots in offering financial services
Chat-bots can be created to be more human and with the ability to answer client queries intelligently. This would minimize the amount of workload for the customer services department. Chat-bots could as well be used in social media sites.
Visual identification and verification of clients
Financial institutions have a long way to go in smoothening functions like account creation, loan and insurance origination and documentation. Incorporating artificial intelligence will allow authentication of documents to avoid confusions and unnecessary paperwork.
Insurance companies can take advantage of Artificial Intelligence and use it to manage and investigate incidences of risk insured against. This will reduce their losses and help them move forward regarding profits earned. Artificial Intelligence tools can also be used in creating insurance policies or home and auto insurance bundles by calculating probabilities of events and pricing of premiums.
Detection and averting cybersecurity threats
Online transactions are usually vulnerable to security threats. FinTech firms can seek a solution to this using AI that ensures a robust security system. Artificial Intelligence can also aid organizations in singling out fraudulent traits among clients, suspicious transactions and predicting potential future attacks.
Will Artificial Intelligence replace human employees?
Artificial Intelligence tools are not there to replace the human workforce, but instead, they help to supplement them. Moreover, Artificial Intelligence cannot fully replace the input of any human employee, and that is why it needs the close supervision of man to work effectively.
In fact, it will be a one in a million revolution that will instead aid human employees in their daily duties. It will reduce the headache of counter-checking financial documents. Automation will reduce time taken and minimize errors.
The future of Artificial Intelligence in Finance
Future advancements in artificial intelligence and automation will give managers and executive officers an easy time running business operations. Employees, in contrast, will spend less time on repetitive tasks and instead focus on the creative part of production.
Finance is a sensitive subjective in any organization, and it is for this reason that companies seek better ways of handling office finance. Moreover, competition is tight, and companies are trying to stay ahead in getting new FinTech innovations. AI adoption in FinTech has proven to be the edge between successful companies and others.