Artificial Intelligence and Fintech - The perfect combination for the Digital Age

 

INTRODUCTION

Artificial Intelligence is a vital tool that is having a huge impact in all sectors. The Fintech Industry understands this and is utilizing it for everyone’s benefit. They have figured out that utilizing AI in Fintech has a very good potential to augment the intelligence of humans to improve organizational processes and make better financial decisions. As all this leads to a better customer experience and in turn improved satisfaction.

A.I in Fintech has seen some huge developments in the last few years. Due to this, A.I technology is quickly transforming the way the industry operates.

What are the forces behind the drive of Artificial Intelligence?

Not only in fintech but almost all industries there has been a higher demand for AI solutions. The world is changing, evolving, developing at an enormous pace.

Currently A. I technology has a market value of $ 10.1 billion globally and is projected to grow to $ 15.7 trillion by 2030. It has had a vast impact on a lot of areas in business. Right from reducing costs to customer satisfaction, usage of this technology provides an in-depth understanding of the needs of the customers and the processes of the company, they empower a business to optimize and refine the offerings in the market for a changing world. 

Especially over the past few years, AI has been continuously adopting smart solutions to cope with the ever-changing industry landscape. So let us take a look at some of the factors with which we understand why A. I have become more significant in entering the fintech industry.

1. Fraud detection and prevention at the earliest

Financial institutions have always faced the problems of fraud and are not able to detect them early and thus their prevention. After the advent of technology, these institutions have been trying to prevent fraud cases at the earliest. But after utilizing A. I development services the data is being captured and analyzed in real-time. Organizations utilize different models to detect patterns and recognize fraudulent processes. The use of A. I technologies help in making safe financial applications and software. A huge amount of data is processed and evaluated for utilizing better applications in fintech.

 A huge amount of data will be evaluated and processed for great applications utilizing Artificial intelligence and machine learning. As a result, fintech is the perfect industry in which AI and machine learning advances have a bright future.

2. Customer Support

The most primary advantage the AI has provided is that banks and fintech companies are utilizing AI to provide customer services in real-time.

Chatbots

These are the most famous and popular examples of AI, and a lot of fintech industries are utilizing chatbots to have a conversation with customers. By utilizing these services AI helps customers solve their problems efficiently and instantly. It is predicted that by 2022, 90% of companies will be utilizing chatbots. The revenue generated by chatbots in 2021 was around $ 83 million.

Personalized Experience

When talking about financial aspects people expect deeper relationships and intimacy with the business. To build long-lasting relationships you need to build trust among the customers. They also require a certain level of transparency with the institution. One of the main reasons people appreciate the introduction of AI in banking and fintech solutions.

3.Predictive data analytics

The data analysis that AI tools help the financial industry to utilize, helps mainly in increasing sales, maximizing the utilization of resources and increasing the efficiency of the operations. Businesses can use algorithms for machine learning to acquire large data sets successfully to create quicker and more effective predictions for future developments of financial markets. These resources provide your customers with tailored solutions especially for them. This provides customers with an incredibly personalized experience, leading towards more trust and loyalty towards the organization.

4.Process Optimization

In simple words, it is the process in which productivity increases and the amount of manual work to be done by the employee's decreases. It is used to automate functions, optimize and reduce paperwork especially for customer-facing chatbots, improving the training process of employees. A lot of systems are now automated right from replying to the queries of customers to the generation of reports and analytics of customer data. This has brought a huge change and development in business dynamics.

5.Credit Scores

The current credit scoring systems are outdated. The decisions are based on age, occupation, race, gender and demographic rules. The AI and ML empower the companies to profile the customer risk more effectively, while you take into account the person and do not base it onto a stereotype.

This credit scoring software reduces the non-performing loans to 50% while the returns are increased up to 30 %. These technologies work by building models and validating them so that the work is checked and deployed to market swiftly. This means institutions are less likely to lend to risky clients and the customers can access services quickly. The customers avail themselves quicker services, getting answers to their credit decisions whenever they require.

Artificial intelligence has provided the banking world and the financial industry a whole new way to meet the customer demands who want more convenient, safer methods to access, spend, invest as well as save their money. So let us take a look at how AI is being used in some of the finance companies and making its way to revolution.

1. Kensho Technologies

Kensho provides data analytics and machine intelligence services to famous financial institutions like Bank of America, J.P Morgan, S and P global. The software provides analytical solutions using NLP and cloud computing. This system provides simple answers to complex financial solutions.

2. RazorPay

A payment solution from India that allows businesses to accept, disburse and process reimbursements with the help of its product suite. Their AI-powered process Thirdwatch works well and helps reduce the return to origin fraud losses in the e-commerce industry. (RTO fraud means when a customer returns a product by either changing it with a faulty product in the first place or by denying it that they received it.)This AI helps reduce RTO frauds by utilizing an AI engine that processes orders directly from the user's accounts to the e-commerce platform Shopify. The AI provides green and red flags, where green shows fewer risk orders and red shows high-risk orders. The company can reject or modify orders depending on their reasons.

3.Canoe

A canoe makes sure that alternate data for investment can be collected and extracted properly using APIs. They deliver first of its kind technology that modernizes data workflows and provides scalable services to all its customers by analyzing crucial information.

Recently there have been several fintech startups in India.AI is powering these financial institutions to provide various services right from credit risk evaluations, profile analysis, data security, trading, financial consulting and much more. So make way for several revolutions in the Fintech sector where we wait for something grander, easier, simpler, much more advanced in terms of finance. The final goal of AI would be to create frictionless banks. Here, there would be no frauds, no managers, no branches, no credit cards, no menial activities.

The importance of AI in fintech is becoming apparent daily.AI has become a technology of choice. We at Lucent believe in following the latest technology trends and keeping ourselves updated. So, here was a short glimpse of AI in Fintech and its applications.

Lucent Innovation is a full-service software design and development company and an expert e-commerce solution provider. We create custom applications for our clients leading to an improvement in the efficiency, increased growth and profitability of the business. We also build e-commerce websites that are ready to sell, scale and grow.

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Also, read- Cryptocurrency: The digital currency revolution.