The finance industry is undergoing a major transformation that is being driven by technology. One advancement that is a game changer is AI “Artificial Intelligence”. It is changing the finance industry from inside out. Amalgamation of AI in Fintech has streamlined all the traditional ways of doing processes and given birth to capabilities that we thought existed in only finance movies.
To be more specific, by integrating AI in Fintech we are changing how services are being delivered to the consumers. In this blog, we will capture 7 ways in which AI is revolutionizing the Finance Industry. So, without waiting further, let’s begin.
7 Ways AI is revolutionizing Finance Industry
Here are seven ways in which AI in Fintech is making strides as well as improving, enhancing, developing how financial services are being imparted.
1. Enhanced Risk Assessment
AI algorithms can detect risks which humans can’t. Organizations and institutions use these algorithms to find out credit risks effectively. It is most widely used by Banks, NBFCs and other loan giving bodies. The accuracy offered is beyond human capabilities. It also helps distinguish between people who are underserved and those who are given easy loans but do defaults.
2. Fraud Detection and Prevention
In finance fraud detection is very crucial. It happens the most in this sector. AI enabled systems can detect any faulty transaction, journal entry in real-time. One can also run a testing to find any unusual pattern or fake invoices/bills. With AI you can encounter frauds before something big happens. Such programs can save a fortune for financial institutions.
3. Personalized Financial Services
AI has made customization or personalization very easy. There are so many tech companies in the market that can develop software based on your needs and requirements. The biggest perk of getting a personalized financial service is Data Analysis. You can get insights on customer behaviors, their patterns. Counter effect of this customization is that a company can provide products based on customer needs and wants.
4. Algorithmic Trading
In the stock market two things are most important- speed and accuracy. If you cannot handle the real-time pressure of the market then you will end up making losses. Now with AI in Trading, you can set reminders, notifications, alerts and even give them the permission to make trades on your behalf. And we all know that AI will do that at lightning speed and save you from any risks. Other perks are predictive analysis, strategic investment guidance, chat support etc.
5. Regulatory Compliance
The finance sector has the most compliance and regulatory requirements. Catching up to each one can be a tedious task. The best and easiest option is to automate the compliance checks. This way whenever you are approaching any deadline the system will remind you and even do the filings for you. NLP tools can help in analyzing documents for any errors and whether they are up-to-date. All this can save you tons of money in fines, penalties and late fees.
6. Improved Customer Insights
Understanding and knowing your customer is the key to every business. With the use of AI you can uncover your customers in ways you never thought existed. You can analyze their spends, their social media searches, investments and even their saving patterns. Banks can easily customize their products based on customer needs. For example: credit cards, debit cards and even FDs. All this will promote an ecosystem of loyalty and best customer experience.
7. Smart Wealth Management
Have you heard of robo-advisors? These are AI-driven software that provide wealth management and investment tips. With these types of tools the people who aren’t aware of how to invest or manage funds can also do it. Ultimately it is increasing the audience. These robo-advisors offer a personal touch to each individual by analyzing their portfolios, risks, and spending methods. It is amazing how accurately and efficiently it develops a customer-centric financial plan.
Is AI in Fintech “The Solution to All Problems?
AI is definitely not a buzzword in this space. Rather it is a force that is redefining how the financial sector operates and will operate in future. To answer the question- Whether AI in Fintech is “The Solution”? Maybe and maybe not. The potential it holds is immense and we have just seen the tip of the iceberg. Yet a lot is left to be explored.
From risk assessment to wealth management we have seen how it is making everything better. By far it has proven to be an efficient and smart way to carry out processes. The future is unknown and we can expect better transformations. Who knows fintech has a much brighter future ahead!
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