How Will AI Development Shape Fintech?
Investors around the world are taking a huge interest in fintech companies. In fact, investment in fintech organizations rose by approximately 10% to just over $23 billion in 2016 alone. This is mainly due to the fact that AI development and machine learning will have a dramatic effect on how these companies work, meaning that AI allows you to process information more accurately and quickly, enabling recognition of specific patterns and improving with every task it undertakes. As a result, its ability to process information becomes quicker over time. Documentation and processing requires lots of brainpower, so naturally there’s more space for human error. While AI isn’t advanced enough to completely replace humans, it can validate and double-check information for duplicate expenses, among other mistakes. Here’s how AI is already changing fintech and making its way to the top.
The biggest challenge in fintech is generating insights that could accurately predict customer behavior in the future. We can collect data and make pretty good guesses on what’s going to be trendy next year – AI can already analyze customer behavior patterns and make accurate recommendations. That’s something most big companies already practice, especially in e-commerce, but these machine learning algorithms still can’t provide data on the reasons behind people’s decisions, thus human psychology is still a mystery for AI. For example, how can you explain loyal clients suddenly abandoning your services, though they were happy for the last 10 years?
In the future we can expect AI to become smarter at explaining people’s habits and give deeper analysis on customer behavior. Deep data digging will result in offering personalized services, meaning that banks will become more efficient and less time consuming. Insurance companies will also benefit from this, because AI will likely help avoid various road accidents and reduce claims.
Security has always been a huge priority and issue when it comes to online transactions. That’s one of the reasons various fintech companies are integrating AI into their processes. Traditional security precautions, like anti-virus software, are no longer keeping up and companies are looking for the next best thing: artificial intelligence. The security needs of fintech companies are often very specific, as cybercriminals also very sophisticated. With AI fintech companies can constantly improve and update their security measures. AI’s ability to continuously monitor for suspicious activity enables organizations to keep up with evolving cyber threats and enact counter-measures against those threats. While people still have much to learn about AI development, this type of technology has the potential to revolutionize how financial institutions combat cybercriminals.
In the future AI could also make a dramatic leap forward in keeping our digital accounts safe, whether it’s your bank account, social media or remote work platform. Biometric authentication and tokenization use AI technology to create stronger systems. We’re talking about devices that use voice recognition and natural language processing to identify and authorize personnel through their voice, also devices that scan eye patterns and provide flawless user identification.
Improved Customer Sevice
You’ve probably encountered chatbots many times through your life. They’re these virtual assistants that send automated responses to people using certain digital services, most times lacking a personal touch, sounding very robotic and irrelevant. This is where AI could power next generation chatbots that can intelligently answer customer queries, effectively reducing load from customer services departments. Chatbots could be integrated with social networking sites, and accept requests for applications and orders directly from social media channels. They’re now being used by a variety of financial institutions as self-service customer-facing tools. For example, HSBC has created its own AI-powered chatbot that helps customers with a variety of tasks and queries.
A recent survey shows lots of potential for the development of advanced chatbots. Three out of four financial institutions surveyed view chatbots as a promising investment opportunity that should be pursued within the next one to two years. As a result, the share of transactions handled by AI is expected to grow substantially in the coming years. In the sphere of personal finance, robo-advisors are expected to manage about $8 trillion by 2020.
AI development holds lots of surprises for the future of marketing, customer service and risk management. Smart AI bots can be used to scan customer digital footprint, analyze data, and make more accurate risk assessments. This way the customer gets a fair amount of coverage based on their safe driving behavior. There’re a lot of areas in fintech that will experience the transformative effects of AI development, and many that actually depend on machine learning for growth. AI will change the way we shop and pay for goods and services online, how we invest, how we bank, and ultimately, how we live out each day in an increasingly digital world.