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Metaphorically speaking, artificial intelligence and fintech are the new peanut butter and jelly. Around 56% of firms use AI in at least one business function, according to McKinsey research. AI technologies help fintech companies and institutions to keep in touch with their customers, automate customer support, improve fraud detection, and simplify the decision-making process with data and predictive analysis. Keep reading and learn how AI will help fintech companies and how AI is already changing the fintech industry.
Source: KPMG
Who should consider using artificial intelligence in fintech solutions?
Fintech artificial intelligence is not a one-size-fits-all answer. Simply put, not all businesses in the sector benefit from using fintech AI. There are, however, cases when AI in fintech solutions can generate great value:
Increased security driven by authentification
AI increases financial security through speech, face, and fingerprint authentication. Compared to standard passwords, this extra security makes it more difficult for hackers to exploit. It's possible that in the future, AI-powered security solutions will take the place of usernames and passwords even though these procedures are still being improved.
Source: Verizon
As the world gets more online and less personal, cyber security becomes more and more important. The most susceptible financial institutions include banks, fintech, and other companies dealing with large amounts of money daily. Keeping up with AI and machine learning advances ensures that your company has the greatest security possible.
Behavior-based investment predictions
Artificial intelligence is used in finance to enable data patterns to be automatically recognized, examined, and modified. Furthermore, even with imperfect data quality, artificial intelligence in fintech may still offer insightful forecasts about exchange rates, investments, and short- or long-term trends.
The capacity of fintech AI to evaluate unstructured data, which is crucial for financial services, is even more astounding. This may be used in fintech to forecast product appropriateness and modify marketing strategy by observing consumer behavior.
Source: IDS Fintech
Several smartphone apps with AI backing now examine historical and current data about businesses and their stocks. Additionally, they assist investors in determining which stocks are suitable for investment and which would be a poor choice.
Automated data processing
There are many uses for AI-based software that enhances data processing or takes over administrative duties like invoicing, and it has a successful track record.
IT analytics solutions may actively seek and find IT service delivery automation possibilities. Based on their broad strategic IT objectives, it can also match that company's teams and vendor relationships. Additionally, these resources can contribute to increased automated agility through improved departmental coordination in IT services. Such powerful systems can strike a balance between security and agility.
Human-like interaction with customers
AI and fintech has revolutionized the financial industry, enabling innovative solutions like chatbots, robo-advisors, fraud detection systems, and more.
AI chatbots are at the forefront of the customer service line. Modern AI chatbots can comprehend and speak in normal human language and detect consumer mood and intent.
AI-based trained data models for natural language processing (NLP) and natural language understanding (NLG) assist chatbots in understanding human communication in a natural voice and text language and correspondingly communicating. Ultimately, this leads to more effective lead generation, customer support, and company conversion.
The advanced AI chatbots that go beyond first-generation rule-based chatbots can now respond to a wide range of domain-specific bespoke inquiries, which leads to a deeper knowledge of client interactions. Fintech organizations can renew their identity on the digital scene and get more leads thanks to personalized and speedy communication.
Empower your business with an AI-based fintech solution Read more
4 Use cases of AI in fintech with examples
Financial reporting
Fintech and AI found each other largely due to the ability to create financial reports. They may be generated using AI and financial data. Banks and other financial institutions contain vast amounts of data, which they use to generate reports after careful research. After thoroughly reviewing the data, these reports must be produced, which takes time. Companies frequently require these reports, notwithstanding the possibility that the input data sets may vary.
Wealthfront
With 440,000 members and $25 billion in assets under management, Wealthfront is one of the top robot advisors in the market. The minimum account requirement is only $500, offering many investing possibilities, including cryptocurrency. It also has relatively cheap costs, with most accounts paying just 0.25% and no transaction fees. Since UBS bought Wealthfront at the beginning of 2022, the company is anticipated to grow even more quickly.
Customer experience
There are hundreds, if not millions, of customers at huge financial organizations. Catering to so many different individuals without AI-powered technology would be a huge undertaking. Personalization may boost brand loyalty and customer confidence in your business.
When clients download banking apps, customer data is gathered and analyzed by AI systems. Information can be used to provide pertinent, pre-approved products and specialized financial advice. In banking apps, AI can help users track their spending goals and financial objectives.
Due to their inherent learning ability, AI systems will only get better at reading client data and providing individualized experiences. Artificial intelligence (AI) models assess voice and speech traits to produce useful information and can separate precise patterns from monotonous babbling. Analysis of AI transcripts can predict a customer's mood and direct agents as to what solutions to offer them.
Kasisto
KAI, a conversational AI platform used in the banking sector to enhance client experiences, was developed by Kasisto. By providing customers with self-service alternatives and solutions, KAI helps banks lower the traffic of contact centers. Additionally, AI-powered chatbots help customers make thoughtful financial decisions by offering sage advice.
Fraud detection
Artificial intelligence can respond instantly to the data supplied to them, recognize patterns and correlations, and maybe even spot fraudulent activities. This is extremely helpful for the banking sector, as there is a staggering amount of digital transactions per hour, necessitating greater cyber security and effective fraud detection. Fraud analysts no longer have to do as much work, freeing them to concentrate on higher-level problems, while artificial intelligence works in the background to find the lesser ones.
Vectra
Vectra developed Cognito, a technology for identifying and pursuing cyber threats. The software from Vectra automates threat detection, finds covert attackers, particularly those who target financial institutions, quickens event investigations, and even finds compromised data.
Data analytics
The stock market has become one of the finest investment options for millennials. This trend has generated a big demand for AI-driven apps that help people navigate the stock market more effectively.
Several smartphone apps with AI backing now examine historical and current data about businesses and their stocks. Additionally, they assist investors in determining which stocks are suitable for investment and which would be a bad choice.
Perfios
An effective data analytics platform is provided by this Indian business, mostly employed by banks and non-bank financial institutions (NBFCs). It aids in fraud prevention, better loan selections, asset management, and obtaining trustworthy credit scores. Deutsche Bank, Canara HSBC, and Home Credit Finance are just a few companies that Perfios has as clients and has received over $120 million in investment.
Binariks built a cryptocurrency payment system for e-sports betting Read more Cryptocurrency Betting Platform
What niches in fintech heavily rely on AI?
When AI is used in finance, it can potentially change how credit and risk are distributed, leading to more equitable and inclusive systems.
Digital banking
The challengers vying for their throne put pressure on established financial institutions. Neobanks typically provide higher interest rates, lower fees, and more openness about money movement.
RegTech
It takes time and is prone to human mistakes to keep up with the rules and prepare all the required documents. This justifies the purchase of automated compliance software.
Chatbots that can provide regulatory guidance, cloud-based platforms for managing regulatory and compliance data, and computer code that enables more automated processing of data about regulations are all examples of RegTech.
Robo-advisors
When humans and robots work together, everyone wins. Humans may concentrate on more strategically and creatively oriented activities, while robots automate and simplify back-end office tasks. The processes listed below are ones that robots can manage.
- Integrating new clients
- Conducting security inspections
- Carrying out loan applications and trade finance activities
- routine incoming phone calls for transactions and account statements, among other things
3 Benefits of using AI in fintech
The benefits of AI in fintech are numerous, and it's no wonder that many financial institutions are turning to this technology. Let's take a look at 3 key advantages.
Cost-saving
Based on McKinsey's report, 44% of businesses adopt AI technology to lower company costs in areas.
The fintech sector can save billions of dollars in resources, labor costs, and capital using AI-powered solutions. Given the labor cost, manual processes frequently take longer and cost more money. By replacing these tasks and activities, AI automation saves resources. As AI technology answers most questions, customer service teams spend less on hiring new employees.
By providing tailored insights, preventing money laundering, and conducting credit underwriting in the back office, AI helps banks save money in all three areas of their operations.
Due to the cost savings from implementing AI technologies, banks can offer better deals and draw in more clients. Saving money while increasing revenue and profit as the result.
Improved customer experience
According to recent statistics on artificial intelligence, 62% of consumers use AI to enhance user experience.
With artificial intelligence already making considerable strides in customer support for banks and fintech businesses, customers are growing accustomed to receiving prompt replies at any time of day. To facilitate transactions and answer questions, financial institutions must be accessible around-the-clock, every day of the week.
Call centers are regularly under pressure to clear backlogs while offering assistance continuously. Chatbots, virtual assistants, and other AI-powered interfaces reduce workload by addressing common user queries and issues. This gives customer service representatives more time to handle complicated inquiries.
Advanced sentiment analysis, which focuses on assessing the client's experience, identifying gaps, and training chatbots to close those gaps, is one way AI is assisting in improving fintech customer service. AI-based solutions make communicating with the finance industry simpler and more convenient for clients. More contented clients and customer service staff translate into a more successful business.
Better analytics
Around 48% of companies use AI in fintech to address data quality challenges and enhance analytics, based on the O'Reilly report.
Systems with artificial intelligence (AI) can analyze data from hundreds of sources and predict what will work and what won't. AI can also conduct in-depth customer data analyses and make predictions about consumer preferences, product development, and distribution methods.
Human analysts cannot compete with the effectiveness of well-trained algorithms. Unlike a person, an AI allows you to examine its inner workings and see precisely how a decision was made.
Binariks will help you with AI implementation
First off, the value we offer is the result of industry knowledge. At Binariks, developers have worked on projects for both large corporations and small businesses, bringing them outstanding returns on investment.
We make it easier to gather everything in one location. We design, engineer, and support fintech applications with AI. There is no need to oversee multiple contractors when one will do. The team you choose will be familiar with developing software that complies with domestic and foreign legal fintech standards.
We contribute technical and commercial knowledge to all projects thanks to our background in AI. This is disclosed to clients so they can quickly understand applied algorithms collaborating with us on your upcoming project using AI for fintech!
Our technique has been refined via hundreds of use cases in several sectors, and we have a track record of successfully tackling the key issues at each level. Therefore, we categorize them based on how well they perform throughout the experimental phase.
Final thoughts
Artificial intelligence offers the financial sector a special chance to save costs, enhance client satisfaction, and boost operational effectiveness, among other things. Financial institutions may provide their clients with top-notch financial services outside their branch offices.
Fintech firms worldwide employ various AI capabilities to increase the efficiency and safety of their operations. One key objective of all these solutions is to boost fintech organizations' productivity. Your staff will work much less hard if you use chatbots and automation tools for data analysis.
However, there is frequently still a need for more skilled AI programmers. Because of this, banks are turning to specialist software development firms with fintech-savvy engineers with years of expertise. Are you looking for an AI development team that works in the fintech industry? Contact us , and we'll assist you in maximizing these cutting-edge technologies.
