How AI Will Impact the Future of the FinTech Industry

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AI in FinTech has disrupted financial services over the past few years. AI builds a secure work frame for businesses and paves seamless pathways for customers to avail services.

But it’s important to see how AI will impact the future of the FinTech industry. A closer look at emerging AI application developments will show how AI shapes the industry on a larger scale.

Emerging Role of AI in the FinTech Industry

Emerging Role of AI in the FinTech Industry

As finance businesses seek to learn more about machine learning, robots, and analytics, they are more inclined toward Artificial Intelligence (AI). It is a tool that finance firms want to use to simplify complex functionalities. They can also add multiple operations to boost business and bring consistency to customer services. Also, they want to get AI for fraud detection and improve security measures to the highest levels.

The impact of AI is increasing in various fields, from automating manual processes to boosting decision-making processes. These tasks aim to deliver personalized financial solutions and precise monitoring of business operations.

Facts About AI Impacting the Industry

As FinTech is involving AI faster, here are the facts about the possible impact of AI on the FinTech sector.

1. Growth of AI

According to Mordor Intelligence report AI in FinTech Market Size Forecasts (2023 – 2028), the AI in FinTech Market will reach USD 42.83 billion in 2023. It expects to reach USD 49.43 billion by 2028 while growing at a 2.91% CAGR during the forecast period (2023-2028).

Financial firms have been one of the fastest adopters of technologies, including AI. Banks also introduced machine learning solutions for websites and mobile applications. AI Chatbots in banking improved customer experiences. This has enhanced real-time target marketing by early predicting customer behavior data.

2. Increase in AI Adoption

As per a PwC survey in PwC’s Global Artificial Intelligence Study: Exploiting the AI Revolution, 77% of financial firms aim to boost their investments in AI and machine learning by 2023.

The survey also showed that AI-based product enhancements will result in complete economic gains by 2030. It will thus encourage AI adoption to fulfill consumer demand.

It will be because AI will drive broad product variety, with increased personalization and affordability in the future.

3. Personalized Financial Solutions

Gartner’s finds in Gartner Predicts Chatbots Will Become a Primary Customer Service Channel that by 2027, chatbots will become organizations’ primary customer service channel.

25% of customer service engagements in the financial sector will support AI by 2023, giving clients personalized solutions/services and products.

The use of Chatbots and virtual customer assistants (VCAs) in this industry has increased over the years. It has become a critical technology component of a financial service firm’s strategy today.

4. Improved Risk Management

Deloitte’s 2023 Banking and Capital Markets Outlook study reveals that credit risk in the FinTech sector is expected to drop by up to 30% due to AI-powered risk assessment and management technologies.

These predictions and forecasts show that the influence of AI on the FinTech sector in 2023 will be big and successful. Enterprises are speedily adopting the technology to stay ahead of digitalization and thrive in the turbulent economic state.

The Most FinTech Innovation Fields Going Forward

While predicting FinTech innovations with AI is difficult, the industry constantly sees new developments in a few specific fields. Those include:

The Most FinTech Innovation Fields Going Forward

1. Digital Payments and Money Transfers

New payment technologies and expanding existing services like mobile banking are the finest innovations supporting AI. Instant money transfers, including customized offers and perks, are also AI-based, attracting more customers.

AI-based payment platforms allow customers to identify their banking and financial status and get notifications, alerts, and activity details.

2. Blockchain

Blockchain technology has disrupted the financial industry by bringing more innovations. It includes new application developments and designing new crypto-currencies and other digital currencies. Blockchain in FinTech has also allowed businesses to build secure finance networks and infrastructure.

3. Accurate Predictions

The use of AI in the FinTech Industry is expanding to automate processes and make accurate predictions. AI is helping a lot of monolithic tasks that consume a great amount of bandwidth by reducing errors.

AI-based applications produce accurate results in analytics, monitoring, data analysis, and predictions. By using the tools, businesses provide solutions and services to the right set of customers. Work functions and operations are faster and more accurate, cutting back the chances of errors and skips.

4. Reduced Operational Costs

AI is also helping firms majorly in reducing operational costs speedily. Installing robotic process automation (RPA) is helpful as it replicates the process of manual tasks to avoid unnecessary costs.

Likely said, one AI application has the capacity and capability to deliver multiple tasks and functions. This is discarding additional operational forces, tools, and devices, thus resulting in less operating costs.

5. Enhancing Customer Experience

AI and machine learning are improving the customer experience landscape. The technologies are improving by understanding customers’ buying behavior, suggestions, searching patterns and navigating products and services. As the tools and algorithms read continuous data, it gives more relevant suggestions to customers.

For instance, AI-powered chatbots detect the behaviors on banking websites, applications, and social media platforms. The detection results in providing instant recommendations and solutions. This allows financial firms to deliver personalized banking, investment, insurance, and other digital finance services at scale.

Top Use Cases in the Future with AI

1. Data Learning and Analysis

AI data mining tools help FinTech firms to assemble multiple accurate facts instantly and reduce data silos. With this, the tools also analyze, clean, and archive information under a strongly protected layer with high-security walls.

Also, tools forecast future trends by evaluating historical information through predictive analytics. It helps businesses understand financial market positions, future market predictions, risk monitoring, and revenue forecasting. These predictive models provide accurate results. However, to use it, firms need to create strong strategies to execute the data analysis process smoothly.

With AI, they can smoothly do data modeling, data management, and data governance to reduce data breaches and other security breaches.

2. Facial Recognition, Fingerprint Scanning for Secure Payment

Sending and receiving payments through facial recognition and fingerprint scanning is an advanced AI-based technology. Many financial apps and digital payment platforms have adopted it to provide seamless and secure ways for money transfers for customers.

AI tools have customers’ data, which detects recognition using them. Through this, the algorithms detect suspicious activities and alert customers about discrepancies.

Also Read: Trends that will Rule the FinTech Industry in 2023

3. Trading

Through quantitative, algorithmic, and data detection, businesses can install AI applications to boost trading. The algorithms evaluate huge amounts of data in real-time. It alerts customers and enterprises about stock rates, market position, current stock position, etc. This allows them to make immediate decisions.

4. FinTech’s Future is Better with AI

There are challenges to AI in the industry. But the point of view of AI in these fields shows that the technology will expand with customer demand. The more promising future of AI in the FinTech sector remains for revolutionizing finance management, investments, and immediate transactions management. They result in a more practical and inclusive financial environment for businesses and customers.

However, the way FinTech firms invest in the technology and training employees will determine the usability of AI throughout the business. Businesses that can better use the technology and their capabilities will establish a competitive environment and allocate resources more efficiently.

Anushree Bhattacharya
Anushree Bhattacharya
Anushree Bhattacharya is a Senior Editor with TalkCMO, where she covers stories on B2B business strategies and digital marketing. She is a quality-oriented professional writer with eight years of experience. She has been curating content for the B2B marketing industry, and her writing style is inclined toward how businesses want to perceive information about emerging digital transformations in the marketing landscape with latest developments. Anushree blends the best information on trending digital transformations, technology-driven stories, and SEO-optimized content. Anushree is proficient in curating information-driven stories about marketing for TalkCMO publications.

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