New technologies, including artificial intelligence, play a key role in the financial sector. They have led to the rapid development of the fintech industry. According to research, by 2026, the size of the global AI market in fintech will amount to an astounding USD 26.67 billion[1].
Fintech companies also increasingly benefit from AI consulting and ML. These technologies help them automate processes and make more accurate predictions.
Let’s see how AI is revolutionizing fintech and what more can we expect in the future.
What is fintech?
FinTech is short for financial technology. It refers to the use of technology to improve financial services (e.g., taking loans, managing finances, or making online payments). Simply put, fintech is a variety of technological or financial innovations. Visit NHN group if you’d like to know more about security services.
Examples of Fintech areas:
- Banking and insurance
- Data analysis and process optimization
- Advice on decision-making
- Online payments and their security
- Online loans
- Online valuation services
- Blockchain technology
- Biometric and voice identification
AI in fintech – how it will change the industry
AUTOMATION OF MANUAL PROCESSES
One of the major applications of AI in fintech is the automation of manual processes. In the past, employees handled loan applications or insurance claims manually. Of course, it took a lot of time. Today, banks or insurance agencies can train AI models that are able to process huge amounts of data quickly. According to a survey, over 40% of financial leaders believe that the main driver of automation is the need for faster, higher-quality analytics[2]. By automation, AI can identify fraudsters and find relevant information needed for a mortgage, loan, and insurance applications. Thus, AI is changing the way many financial companies operate, providing greater efficiency and cost savings.
AI-POWERED PERSONALIZED BANKING SERVICES
One of the factors contributing to better customer service is AI-powered chatbots. These are tools that can answer consumer questions instantly. Thanks to them, communication between the bank and the user is more accessible and convenient.
AI improves the customer experience by providing personalized recommendations and advice. Take, for example, large banks that serve millions of customers. An individual approach to each of them would be quite a difficult task. However, thanks to AI, banks are able to provide personalized services. Many banking apps help customers track their income and expenses. These products can also provide advice and personalized investment recommendations.
Automation also improves customer service. Users do not have to wait long for a loan decision; they can also do many things online.
DECISION MAKING
Many companies also use AI to forecast financial markets and conduct credit risk analysis. This enables organizations to make better and smarter decisions.
AI algorithms analyze huge amounts of data about a potential borrower. For example, his current employment but also future employment opportunities, current income, and earning potential. In this way, banks can grant the most affordable loan. It should also be noted that the decision is made on the basis of data and not on people’s emotions. Hence, AI eliminates the bias so common in decision-making.
FRAUD DETECTION
Fraud is one of the main and most costly problems in the financial sector. Thus, companies use new technologies to increase security. Artificial Intelligence allows them to monitor user behavior and detect unusual behavior. If the system detects fraudulent activity, it may block the request or access to the customer account. Fraud causes huge financial losses, reduces the company’s reputation, and deteriorates the customer experience.
So, it’s no surprise that financial institutions are investing in AI to prevent fraud.
STRONGER SECURITY
The financial sector is the industry most vulnerable to fraud and data theft. Besides, the world is getting more online now, and that affects security. That is why many banking institutions have decided to introduce AI to increase cybersecurity.
How does artificial intelligence increase security? By monitoring user behavior, speech, face recognition, and fingerprints. Biometrics are much more difficult to circumvent than, for example, passwords. Therefore, it is believed that in the future, we will not use passwords anymore. They will be replaced by security solutions supported by AI.
Conclusion – the future of fintech AI
As we can see, artificial intelligence offers many Fintech opportunities. It is believed that the use of AI in the financial industry will increase in the next few years. Since the fintech industry is constantly evolving and new technologies appear every year, it is difficult to predict what we can expect in the future.
However, we will certainly see further innovations in digital payments. Artificial intelligence has already had a huge impact on how we make payments. In the future, we will be expanding services such as mobile banking.
In the coming years, we can expect to see more innovations in blockchain technology and cryptocurrencies. Perhaps new cryptocurrencies and new applications for blockchain technology will be created.
[1] https://www.mordorintelligence.com/industry-reports/ai-in-fintech-market
[2] https://blog.workday.com/en-us/2020/how-intelligent-automation-transform-finance-function.html
