Machine Learning (ML) significantly impacts and benefits the FinTech industry. FinTech, a combination of technology and financial services, has been revolutionized by emerging technologies like ML. Here are the top benefits of ML for Fintech:
Financial Trend Forecasting:
ML algorithms are employed to forecast financial trends, predict market risks, identify opportunities, and reduce fraud. By training models on extensive datasets encompassing financial interactions, loan repayments, and customer interactions, FinTech companies can make informed predictions about lending, insurance, and stocks.
Around 70% of global daily trading involves algorithmic trading, a machine-learning application that operates without human emotions. Based on pre-programmed instructions and financial algorithms, this method considers market variables like price, timing, and volume. Algorithmic trading proves advantageous by eliminating emotional biases and enabling consistent monitoring of market changes.
Advanced Customer Support:
ML enhances customer support through innovations like chatbots, providing instant solutions and a personalized experience. As exemplified by Bank of America’s Erica, Chatbots offer services such as balance sheets and investment portfolio details. ML algorithms analyze customer history to predict preferences and offer pre-emptive advice, streamlining customer interactions and saving time for companies and clients.
Fraud Prevention and Detection:
ML plays a crucial role in fraud prevention by detecting real-time anomalies, especially in credit card and investment fraud cases. The technology aids in analyzing patterns in credit card history and financial transactions, allowing FinTech companies to identify and minimize losses by freezing accounts promptly.
- Advanced Underwriting Services:
ML algorithms contribute to risk assessment in underwriting services, evaluating applicants’ financial history and credibility. These algorithms analyze financial transactions, credit history, and even social media data to determine the trustworthiness of customers seeking underwriting services.
ML’s benefits extend beyond the discussed aspects, impacting operations, security, marketing, customer experience, sales, and forecasting in the FinTech industry. As a developing technology, ML continues to enhance the collaboration between finance and technology, promising even better future customer experiences.
Read More: Top Benefits of Machine Learning in FinTech