Believe it or not, no other business sector other than the finance industry is capable of implementing artificial intelligence (AI) for improving the speed, authenticity & reliability of financial transactions. Less than 70 years from the days when the concept of AI-first came into existence, more & more banks and other financial institutions are now adopting different forms of AI to reestablish their traditional models and deploy advanced infrastructure. It has become an essential part of many advanced & fast-paced industries to get a competitive edge in the global market.
Furthermore, it has been shown by many studies that more than half of financial industries are investing in AI with an assumption of experiencing significant business advantages in the future. AI is affecting the finance sector from all aspects and if you don’t have an idea, here our financial expert, Mr. Ngulminthang Lhanghal is sharing some of the top ways AI is reshaping the future of finance. Let’s start:
Personalized Banking & Financial Services -
AI is letting financial customers enjoy a more interactive & personalized experience while availing services with the help of AI-based chatbots & other machine learning tools. Not only this, AI allows consumers to decide an appropriate style of spending, savings, and investing based on their behavior & habits. AI makes it possible to design products that can observe consumer’s financial data and can suggest what’s good for them.
Cyber Security & Fraud Prevention -
Fraud detection & cybersecurity is the topmost priority for banks & FIs. Although digitization is making people’s lives easier, it is also giving several threats and one of them is cyber-attacks & online fraud. Today, a bunch of sensitive information is being transferred from one platform to another and a huge quantity of digital transactions takes place online, such as transferring money, pay bills, deposit checks, stock trading, and so on via online accounts & digital mobile apps. That’s why banks & FIs need to revamp their cybersecurity & fraud prevention measures to get customer’s trust. Here, AI is helping them make the online environment safe for customers by detecting fraud in large data sets within 250 milliseconds with machine learning algorithms. It can also use historical data to predict any fraud such as credit card fraud where a detection system analyses the client's behavior & habits and sends a security alarm if something weird happens.
Automation/Reduce Human Errors
Sensitive & critical decisions in the banking & finance sector cannot afford to bear any type of human errors. Here, AI makes the processes automated and decreases the dependency on humans with the help of machine learning tools, making decisions informative & well-researched over long periods and huge data quantities. AI ensures automation in the workplace that requires extreme clarity, thus building customer’s trust. For example, robotic processes automation for high-recurrence tasks eliminates the possibility of human errors, allowing organizations to reduce workflow, cut back extra costs and time.
Risk Assessment & Management -
You cannot ignore the significance of AI in the finance sector when it comes to risk management. The extreme processing power helps in handling large amounts of data in a short period while cognitive computing helps in managing structured and unstructured data that usually requires lots of time. Machine algorithms analyze consumer behavior and identify any signs of potential fraud.
Trading
Investment companies rely on tech-savvy and data scientists to evaluate & predict the pattern in trading and investments. Here, AI is a great tool due to its capability of handling a vast amount of data within a short period. Various machine algorithms can observe the past data and can suggest the repetition of those patterns in the future. For example, databases, spreadsheets, or social media, news, etc. The predictions in stock trading are more accurate as the algorithms can test trading systems based on past data.
Credit Decisions
Today more & more customers prefer to pay with debit/credit cards compared to those who prefer cash. But being an easier payment is not the only reason behind their popularity among consumers. Good credit also helps in favorable financing options. With so much dependence on credit, the approval process for loans & cards is crucial. Here, AI is helping banks & FIs to make sound underwriting decisions by using a variety of factors that can provide an accurate assessment of the potential borrowers.
Cost Reduction
Since AI is making various processes automated, it is ultimately reducing costs in several sectors. Take the example of the customer service department where the automated processes are eliminating human involvement while, on the other hand, it is also providing more sound and comfortable financial channels that are easier to avail. As the data can be easily processed now, it is drawing more consumers who are looking for faster finance processes.
Advanced Decision Making
AI is not only capable of operating vast amounts of data sets that are gathered from various channels and included in it but it can also process those data correctly and provide solutions that are data-driven after deep research. This enables financial experts to get advice and recommendations from these machine algorithms for executing correct decisions. Apart from this, the consumers can also manage their financial portfolio without paying any management fee from a traditional advisor.
Now you can see that the benefits & contributions of artificial intelligence are countless. According to a report, several financial areas expect a positive change through the adoption of AI in terms of flexibility and improvement of existing systems. In upcoming years, AI will become an essential part of the finance industry.
