Companies in the financial sector may leverage artificial intelligence to analyze and manage data from multiple sources to provide valuable insights. These innovative results help banks overcome the difficulties they face on an everyday basis while providing day-to-day services such as loan management or payment processing. Now, let’s examine some use cases of FinTech innovation driven by AI, and the main benefits FinTech companies can gain from this technology.
AI in the realm of finance powers many solutions aimed at enhancing security precautions. For instance, banks offer apps that can be accessed only with facial or fingerprint recognition. This is made possible due in large part to Artificial Intelligence.
Some experts claim that passwords and usernames will be replaced by AI-backed security solutions in the near future. Speech recognition, face recognition, and other biometric data can add a supplementary security layer and are more difficult to bypass than traditional passwords.
Artificial Intelligence in FinTech embraces behavioral solutions and can lead to a revolution in finance. The AI can monitor how a customer interacts with their transactions and determine their typical behavior. Let’s say a customer tries to withdraw $7,000 from their account in a place outside their typical location several times in a row. AI-powered machine learning will detect this activity as possible fraud and block it.
Improved Customer Service
There are many use cases when AI can improve customer experience and customer service. A couple of examples include:
Chatbots in FinTech
AI-powered chatbots can minimize the workload placed on call centers as they tackle the most typical and frequent user problems.
As simple as they may seem, each chatbot uses a complex sentiment analysis, which is possible thanks to artificial intelligence. This sentiment analysis focuses on understanding the customer’s experience with your service/application, identifying ways it falls short and training the chatbot itself to address those shortfalls. AI-powered chatbots make communication between a customer and a bank easier and more accessible. They use automated scripts to resolve simple complaints.
With the help of chatbots, some banking institutions can even grow their customer network. For instance, Bank of America generated over one million new clients two months after introducing their chatbot.
AI-Powered Personalized Banking Apps
Many banking apps offer personalized financial advice to help users achieve their financial goals, track their income and expenses, and more.
This personalization is possible primarily due to AI-powered FinTech innovations. For instance, Bank of America offers an app that helps users plan their expenses via an AI-powered, personalized approach to each customer. What’s more, the institution also uses AI to predict the probability of default for companies that request loan management.
User Behavior Analysis
Artificial Intelligence in FinTech can predict a user’s behavior with the help of AI APIs, which can also be leveraged to banks’ and FinTech companies’ benefit. Let’s say, for example, that the user requests data about their expenses in the last month – a single request. On the server-side, with the help of AI, you predict their follow-up request (e.g., income in the previous month) and provide this information in the same response. As a result, you minimize the number of requests and the load on your system accordingly. The user also benefits, as the system works faster if the predictive analysis is correct.
Fraud is one of the most pressing problems the finance industry faces nowadays. According to Javelin, users and businesses experienced a 56 billion dollar loss in 2020 due to fraud. What’s more, fraud’s effects don’t begin and end at financial losses. It also hampers the companies’ reputation and the customer experience, which can, in turn, cost even more.
So it comes as no surprise that banks, enterprises, and financial institutions try all available means of fraud prevention. AI is one such method, as it allows blocking a user’s request or even accessing their account if the system detects potentially fraudulent activity. As a result, AI reacts to suspicious activity before the fraud happens.
AI in FinTech: Wrap-Up
AI in FinTech is used for a wide array of purposes: lending decision making, customer support, fraud detection, credit risk assessment, insurance, wealth management, and much more. Modern FinTech companies adopt AI for enhanced efficiency, improvised precision levels, and high-speed query resolution.
AI in FinTech drives innovation, leading to personalized, fast, and secure services with higher customer satisfaction and global reach. So artificial intelligence in financial markets is here to stay!