The applications of AI in FinTech are adding huge value to the market. The technology is successfully meeting the critical needs of today’s financial sector and its customers.
Grandview research report Artificial Intelligence In Fintech Market says the global market for AI in FinTech stood at USD 9.45 billion by 2021. The market should grow at a CAGR of 16.5% between 2022 and 2030.
With the last ten years marked by speedy digital transformation, technology has changed the financial sector and its services.
AI is one of the technologies that is impacting the sector daily. FinTech is using AI to enable automation and flexibility, aiming to increase the productivity of companies.
It will be interesting to understand AI’s benefits in FinTech, making it increasingly critical for the industry.
Emerging Role of AI in the Finance Sector
AI is reshaping digital financial services with intelligent responses in the financial sector. The technology is changing customers’ expectations regarding availing of financial services. This could be using banking apps, transactions, or personalized finance guidance.
Financial companies and banks also use AI to boost automation in their workflow, including reporting, analysis, evaluation, and reducing human errors. Companies are also using AI to simplify and advance their solutions and services.
Here are the ways AI is playing a significant role in the finance sector:
Automating Tasks: AI enables automation of mundane and repetitive tasks that include data entry, accounting, analysis, and reporting. AI is taking care of these tasks with full efficiency and accuracy.
Improving and Building New Strategies: AI improves the decision-making process and helps build data-driven strategies for financial moves. With algorithms, tools analyze market trends and historical financial data with accuracy.
Banks and financial companies using AI have become smarter in developing the right strategies that benefit customers and revenue.
Improved Customer Experiences: AI has provided customers ease, convenience, flexibility, and fast access to financial services.
Enhanced customer experiences are the cornerstone of any service industry today. AI has provided exceptional value for customers in this sector.
AI-led apps provide personalized financial solutions to customers and have embedded chatbots for instant assistance.
Quick customer interactions with agile response are AI’s boon to this sector.
How AI is Benefiting FinTech Companies
AI’s abilities are constantly expanding for finance.
To get a glimpse of how AI is benefitting the industry, here are the top value adds that companies get:
1. Fraud Detection: AI detects fraud in real-time transactions, accounts, and banking processes.
The tools detect suspicious behavior, gather unusual data, and restrict them by providing alerts to companies and customers.
The ML-powered systems constantly learn patterns and behaviors that help maintain compliance with anti-fraud regulations and reduce risks.
2. Predictive Analytics: FinTech companies can use AI to build scalable predictive analytics modules for financial apps and banking platforms. This allows for deriving analysis reports, helping market-facing teams to hone their strategies.
Businesses can apply AI to gain analytics for product and channel strategy, sales, capital modeling, and data performance.
Deep Learning algorithms work on financial platforms to collate data. These data insights enable businesses to make better decisions to improve their services.
3. Installation of AI-Powered Chatbots: AI-supported chatbots are more likely to assist FinTech users. They are due to their 24-hour support system, instant response, and accuracy.
AI chatbots contribute much more to customer satisfaction than classic CRM tools do. The technology further analyzes and stores customer information and queries in the office system. This helps to create a database that can customize services in the future.
4. AI for Back Office: Banking processes are the core of any financial business. FinTech companies can use AI to build flawless financial transaction platforms and instant payment modes.
AI also helps to manage all back office operations, including data processing and information collection.
AI also automates back office operations of FinTech companies, automating auditing, verifying compliance documentation, and streamlining data migration.
Some Applications of AI in FinTech Companies?
Credit Scoring Model: FinTech companies can build a credit scoring model using AI to create a data-based decision-making process. It also allows for complete transparency in credit scores since it’s a machine-based score.
The model reduces credit risks at scale, which is helpful for banks and financial institutions to keep trackable records of credits.
Robo-Advisors: These AI models are low-cost alternatives to traditional financial advisors.
FinTech companies can use this AI application to help customers make more informed financial decisions.
In addition, robo-advisors are data-driven. They recommend that investors scale their portfolios, management investments, accounting, and financial planning faster.
Contract Analyzer: Contract analysis is a tedious task in finance. So, by deploying AI in finance, managers and advisors can automate tasks through the machine-learning model.
Companies should use Optical Character Recognition (OCR) to digitalize physical documents. Also, installing an NLP model can help quickly interpret, record, and correct contracts.
Computer vision: AI in FinTech is useful for verifying customer information from documents like statements, online accounts, and identity proofs.
The technology also helps to streamline the process of customer onboarding, reduces the risk of identity fraud, and ensures data compliance.
Computer vision algorithms work accurately to extract and analyze images, texts, and documents. The application helps conduct Know Your Customer (KYC) processes in the financial sector.
Also Read: Exploring Conversational AI in the Finance Industry
Financial Forecasting: Artificial intelligence is useful for financial forecasting, which includes identification and changing market patterns.
For this, companies should maintain their data and keep them updated. Even more, AI also helps to analyze unstructured data necessary for financial services.
Moreover, customizing the product through forecasts and updated marketing strategies are other applications of AI for FinTech companies.
Conclusion
AI in FinTech has extremely high value added to the industry and has helped immensely increase customer loyalty. With transparency, speed, and accuracy, it is just what the financial sector needs to grow.
AI-based tools can drive trust on financial sites and fintech apps. The technology has helped the industry on several grounds, mostly in cost reduction, time-saving, mitigating errors, and fast services.
In addition, it has helped to increase the productivity and revenue of FinTech companies.
