AI In FinTech: Smart Algorithms Enhance Financial Processes
Artificial Intelligence AI is a constantly progressing technology that is widely applied in a lot of domains and enhances them, and FinTech is not an exception.
The global AI in the Fintech market amounted to USD 7.91 billion in 2020, and it is forecasted to reach USD 26.67 billion by 2026. Besides, the forecasts also state a CAGR of 23.17% over the stated period (2021 – 2026).
Aside from the brand-new hardware and software creation for this industry enhancement, AI technology helps in the FinTech solutions development to cope with the primary challenges in this niche.
This post will cover the FinTech domain issues which can be easily overcome with Artificial Intelligence, benefits this solution brings, and some successful instances of this technology’s implementation.
Table of contents
Business challenges AI solves in FinTech
Let’s begin with observing the main FinTech difficulties and solutions to them provided by the AI technology:
Enhanced Client Service
What are the main customers’ ways to interact with the financial establishment? By calling or via an online chat. Yet, administrators from the support center are not robots, they can become fatigued, annoyed, distracted, and make mistakes due to the human factor. With AI, customer support can be optimized with the two main solutions: chatbot or robo-advisors creation:
Chatbots
This solution efficiently helps customers by sending automated responses to their queries; they help optimize interaction processes with clients, and live assistants can focus on more complex issues, while more basic requests are processed by chatbots. The cost to build a chatbot depends on the queries’ complexity and the solution type. Here are some more of their functions:
- Notifying clients of new updates and changes
- Account management on request
- Providing solutions to the user queries and complaints
- Ensuring useful information
Thus, the client satisfaction level, as well as loyalty towards your company, will substantially rise. What’s more, in case you have existing financial software, you can upgrade it with Artificial Intelligence integration. With it, your revenue will increase, and your product will gain competitiveness by attracting more customers.
See also: How does Chatbot boost your business?
Robo-advisors
The essential peculiarity of this software is the fact that it may be applied only for the FinTech domain, in contrast to chatbots useful in other industries as well. Robo-advisor is a solution that serves as a substitution to a portfolio manager, it is able to evaluate an investor’s risk tendency, select investments strategy, or even sell/purchase securities complying with the chosen exchange rate.
Those virtual assistants for the financial industry can be efficient helpers for your organization in case it ensures financial consulting services or the stock exchange. What are the other robo-advisors advantages? To make proper investments, clients are required to receive expert recommendations, but human advisors’ services often cost too high. Robo-advisor is an excellent way to engage a broader audience in your business since its cost is decreased.
Fraud Prevention
Fraudulent actions are a great problem in the financial domain, and they can also be solved by AI technology implementation.
How does Artificial Intelligence help in fraud detection?
- Firstly, the software can learn, tract, and save to its memory loads of potential fraud cases
- An AI-based fraud detection system operates all the time by identifying such actions automatedly
- The system is able to learn clients behavior patterns and can bring out unusual actions which may be potentially fraudulent
As a result, with AI, the level of your software’s protection will considerably raise. Such a solution is primarily used in the banking sector. Moreover, a potent security system increases your trustworthiness in the eyes of customers.
See also:How Artificial Intelligence (AI) is improving Cyber Security?
Risk Evaluation in Lending
The solution mentioned above (fraud prevention with AI) is an efficient way to protect lending organizations. Banks and P2P organizations often apply this technology in order to bring out useful data for an opportunity to gather more info about the client and evaluate the loan lending risks.
Within the FinTech lending segment, machine learning may serve as an analyzing, forecasting, and automating instrument helpful for the easier decision-making process, and an enhanced model of credit risk creation.
Visual detection and authentication
Visual identification with neural networks is highly useful for P2P lending organizations and banks, as they are useful for the identification of the client requesting to take a loan and conducting the document verification. Furthermore, AI may be integrated into the credit admin software which processes loan documentation and automates the entire verification.
All the procedures of the financial industry can be modified and be more protected with AI. Such a potent security system will make your software more competitive.
Improved Insurance Suggestions
In May 2017, the AI technologies integration into the operating insurance was begun by Ageas company. This is one illustration that indicates the wide application of such technologies to enhance insurance services.
Artificial Intelligence should be applied primarily in the companies which have to process immense data loads, like real estate and motor transport. Here, this solution may help to evaluate the damage scale after the car accident or to track dwelling conditions.
AI is quite a promising technology in terms of the insurance domain, as it allows enhancing goods and easing services. Machine Learning will be enabled to operate as a human to complete the work easily. Apart from Big Data and IoT, AI will be useful for cutting down the number of insurance applications. Thus, AI implementation in insurance services is highly required to maximize the clients’ satisfaction level.
Refined Investment Analysis
Hedge funds are private investment funds concentrated only on competent wealthy investors. AI technology in this field may be applied to enhance security systems, operate enormous amounts of data, and maximize the analysis efficiency for further investments. Lots of hedge funds have tried automating the part of the investment with computing models, yet, the result is not completely successful. As a result, in FinTech, AI is chosen to be one of the most suitable methods to automate a process.
It would be perfect in case your AI software may be useful in developing a hedge fund that fulfills stock exchange services without real-life assistance interference. The AI system daily ensures a market forecast according to the completed analysis. After that, AI technology helps in precisely selecting the most successful option of all offered for today.
See also:Opportunities for IoT with Artificial Intelligence
Noteworthy FinTech Artificial Intelligence Startups
Let’s now observe the great AI solutions offered on the market:
Aire
Aire is a startup founded in London in 2014, and its main aim is credit scoring for clients with a poor credit history or its absolute lack. With Aire, a credit score can be created based on a questionnaire completed by a customer and using the info from credible sources like LinkedIn. Software queries about such questions that help assess the customer’s creditworthiness, like ‘What are your basic monthly expenses?’, ‘Do you have a stable profit source?’ etc. In addition, Aire has launched its Credit API to enable other lenders to apply their solutions to conduct a credit check.
Kabbage
It’s one of the most enormous FinTech lending organizations integrating AI with headquarters in Atlanta, USA. Kabbage ensures small companies and common clients with loans online. The entire procedure of loan requesting happens through the Internet, and clients quickly receive the final decision concerning the approval/denial of their application. The software applies an automated web landing system with machine learning and Big Data integrated as well. These technologies help analyze the information to build models of credit risks.
Kasisto
This company has developed a chatbot integrating Artificial Intelligence, which provides banking software with a row of diverse benefits. The bot is able to answer voice requests of clients and convert their financial queries properly. There are various questions, and in case answers on them are imprecise or obscure, it may result in substantial losses, and the KAI bank platform (with which the chatbot is developed) knows how to respond to them as it is full of banking sentences and is aware of this domain’s challenges.
Numerai
Numerai can be considered as an unusual hedge fund. Its main aim is processing deals with the help of machine learning models created by anonymous programmers. Once a week, tech-savvy experts are provided with encrypted data which is a visual interpretation of the stock exchange data. Next, specialists apply machine learning technology to look for particular patterns in this data, and after that, they post forecasts on their platform. Developers receive rewards for making projections successfully, and they are ensured as Numeraki tokens exchangeable in Bitcoins. Ethereum smart contracts are fundamental for this solution. In case the trade with the specific algorithm was successful, creators are provided with the reward. In other words, Numerai may be considered as an arena to mine cryptocurrency.
The market of AI solutions keeps progressing, and nowadays, this technology can really make your product more sought-after in case your business niche is connected with finances.
FinTech and AI: a Big Potential for Your Financial Software
According to the AI benefits for the FinTech domain we’ve already described, it may be concluded that this technology possesses immense potential. The financial sector is provided with an excellent solution solving many challenges of this niche.
The progress of processing and ML learning modification algorithms decreased expenditures for services, and higher user satisfaction makes AI based FinTech software a top-notch one.
Summarize
Artificial Intelligence technology in the financial sector helps your digital software gain competitiveness and makes it stand out from the crowd.
It makes the processing speed faster, more efficient, and convenient due to the self-learning ability. Yet, the implementation of this technology is quite complex and should be completed with competent developers who will create an excellent FinTech product for you.
Thus, you should look for credible partners in order to maximize the quality of your software.
See also:Career in Artificial Intelligence and ML ; Jobs and Opportunities
Let us know what you think about AI In FinTech i.e Artificial intelligence in Financial sector in the comment section below.
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Author’s bio
Vitaly Kuprenko is a writer for Cleveroad. It’s a web and mobile app development company with headquarters in Ukraine. He enjoys writing about technology and digital marketing.
