The Synergy of AI, IoT, and Finance
The Synergy of AI, IoT, and Finance
Let's see how AI, machine learning, and predictive analytics, combined with the data generation capabilities of IoT, are impacting the Fintech sector.
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I'm continuing with a series of my posts dedicated to AI and IoT, and this time, we will have a look at the finance sector. This industry is incredibly demanding, as it deals with big and important numbers on a daily basis and thus requires careful analysis and processing of all incoming data.
The Internet of Things and the implementation of artificial intelligence offers new possibilities to the financial industry, and some of those changes have already been implemented. Thus, Mckinsey estimates that the IoT has a total potential economic impact of $3.9 trillion to $11.1 trillion a year by 2025.
Improved Accuracy of Work
Numbers can be hard, especially if they are complex. Therefore, when one works with them, it’s crucial that no mistakes are made. Even the slightest error can seriously impact an entire business. Thanks to the IoT and machine learning, data processing can now be done by machines and thus the possibility of errors is minor. All the information that comes from various devices can now be safely before stored in one place (bye, paperwork) and will further be analyzed and proceeded by artificial intelligence. And that’s really useful for both huge corporations and small businesses: the fewer mistakes you make, the more stable your business becomes.
Predictive Analytics and Forecasts for the Future
Machine learning allows businesses to conduct predictive analytics, which means business owners can receive a detailed report on what can be expected in the future, based on current data and business performance. Of course, certain things cannot be predicted but, overall, predictive analytics is now widely used by a lot of companies because it helps in strategic planning and offers a view of future business development.
More Engaging Payment Processes
First of all, with IoT, payments can now be done much more easily. Your smartphone is already a point of sale, and this opens a whole lot of new possibilities for businesses.
Secondly, retailers can place sensors on various objects that will interact with your smartphone as soon as you are near them. And numerous researchers have shown that those people who receive personalized messages are more likely to complete a purchase.
With augmented reality and much more – thanks to the IoT — business owners and retailers are using your smartphone in order to provide you with an experience rather than a simple purchase process. We can, in general, see a shift in the whole payment system, going from something complex to something more fun and personalized. And of course, the possibility to pay for anything anytime and everywhere is a gold mine for both customers and businesses because it reduces the amount of hesitation that people usually show when they have doubts about completing a purchase.
To sum up, why does the financial industry invest so much in IoT and other modern technologies? Because such technologies will allow financial institutions (like banks, for example) to respond in a timely manner to any customer requests or needs while tailoring the product/service in accordance with those needs. Users are now expecting personalized service in every industry, so for the financial sector, IoT is a way to outrun the competition and get in with other front-runners.
The financial services industry is being transformed by insurgent startup companies, which raised early $32B across 766 deals since 2013. For more information, check out the Fintech 250 2017 by CBInsight.
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