FinTech Reshaped by AI
FinTech has several areas where it can adopt and develop AI solutions both for improving business processes and increasing customer satisfaction.
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Finance is probably one of the first fields to adopt innovations. These days, IoT, AI, and blockchain are the technologies reshaping multiple industries, especially FinTech. AI solutions attract immense investments and for the right reasons. Analysts have counted that Artificial Intelligence is going to save the industry more than a trillion dollars (!) through the year 2030.
How exactly are financial institutions planning to leverage AI? Is it already a part of the processes? Skelia dug into this issue.
Fintech Spheres Reshaped by AI
Adoption of any new technology aims at adding efficiency and better experience to routine processes. FinTech has several areas where it can adopt and develop Artificial Intelligence solutions both for improving business processes and increasing customer satisfaction.
How do you prefer to communicate with your bank? Most of the time, you would choose a phone call or an online chat with a live person. But the organization representative on the other end may be tired or annoyed or in a hurry or distracted, which can sometimes lead to errors, wrong advice, or poor customer service. The problem will go away with chatbots and virtual assistants providing personalized 24/7 support.
Financial virtual assistants are a combination of Big Data, Machine Learning, and natural language processing wrapped up with a conversational interface. Here’s where they are helpful:
- real-time access to your accounts
- payments and transfers
- personalized financial recommendations
- expense tracking and budgeting
- managing your savings
- making micro-investments
Sounds too out there? Well, some virtual financial assistants, like Cleo, Digit, Plum, are already penetrating the market.
The sad irony of loans is that a bank will give you one only when you prove you don’t need money. Many customers don’t get a loan or credit because they can’t gather the stack of documents required by the bank. Incredible as it seems, AI helps people with this problem as well. Limited access to financing has created a tremendous demand, especially among small business owners and freelancers.
Some FinTech startups have found a way out. They use AI-based apps to analyze the potential borrowers’ social media profiles, browser history, locations, etc. and provide their estimate of reliability. This way, people who don’t have a credit history or for some reason cannot pass a traditional credit check, can be defined as creditworthy and receive a loan. Finiata, Lenddo, and Affirm are the startups with a foot in the credit door.
Just like banks, insurance companies deal with stacks of papers and often ambiguous information. This leads to frustrated customers, incorrect claims, and stressful negotiations. Artificial Intelligence can improve decision-making within the industry. It includes different sides of the issue:
- IoT sensors and Big Data analysis allow safer drivers or people with healthier lifestyles to pay less for their insurance.
- Chatbots facilitate buying insurance by providing personalized offers and customized coverage.
- Risk management is a piece of cake for AI.
- AI assistance with claims settlement is fast and more successful. When we say fast, we mean warp speed — 3 seconds from claim submission to payment. This is the result of the independent work of Lemonade’s AI Jim. Way to go for Lemonade’s competitors.
Besides Jim, there are other insurance assistants like Kate or Trov.
Financial Market Prediction
Artificial Intelligence is used by some funds and trading companies to predict market movements. Time series provides a vast source of information for Deep Learning, and companies try to leverage AI for analyzing indexes, futures, prices, etc. They use AI to detect market anomalies as level shifts, spikes and drops, and others.
Constantly changing algorithms of financial markets make traditional software helpless in making predictions while AI has proved to be more effective. But it does have its limits. At the moment, AI can serve as a supplement to a trader’s decisions, while efficient independent work is doubtful.
Numerai and IKnowFirst are the companies coming up with fresh ideas in the field.
TL;DR: Are chatbots better than physical bank representatives? It’s doubtful. Yes, they make fewer mistakes and are more cost-efficient. But they still leave much to be desired and many people have trouble trusting them. Can AI profitably trade on the stock market? Not yet; it can make predictions on specific market moves, but it’s far from the winning strategy. Will Artificial Intelligence beat a hacker’s brain? More or less; it can provide the best possible protection, but it cannot predict new malicious invention.
What AI can do is to assist, advise, and create a better customer experience. At the moment, AI complements human work and makes it more efficient, but it can’t replace a human...yet. Let’s wait and see how big FinTech players will leverage technology to improve the financial sphere.
Published at DZone with permission of Mariana Diachuk. See the original article here.
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