Artificial Intelligence (AI) is disrupting every global industry — and it’s quickly finding its footing in the financial sector as well. With reports from Market Insights expecting the technology to be worth $7,305.6 million by 2025 from just $959.3 million in 2016, the expected compound annual growth rate of 40.4% says more than enough. As one of the biggest technological disruptors in today’s economy, how exactly is AI helping experts and clients in the financial sector?
Algorithmic trading is not a new concept in today’s financial landscape, but using AI to ease and speed up the process on thousands of devices simultaneously is. AI detects patterns and automatically executes trades based on insight from historical data, and is best used for short-term trades as they are time-sensitive. On top of this, using AI reduces slippages, avoids time-consuming methods to monitor the market, and, more importantly, removes emotion from the decision-making process, which is often to blame for errors and psychological fallacies in trading. As AI continues to develop, more and more clients and financial institutions will look to rely on AI’s ability to make fewer mistakes, rather than on human intuition.
Automation of Low-Level Tasks
From algorithmic trading to risk profiling, we know that artificial intelligence can help clients and financial professionals alike make smarter decisions faster. But aside from this, legal experts Special Counsel point out that AI can review and pinpoint relevant data at the blink of an eye, removing duplicates and collecting important information in the process. In other words, AI can do low-level and time-consuming tasks, such as reading contracts and doing background checks, allowing financial experts to focus on what matters most. For instance, bankers at JP Morgan now use AI to analyze loan agreements, using a system named Contract Intelligence Platform (COIN), to evaluate and highlight critical data for clients.
Risk Assessment and Profiling
The introduction of AI has given birth to new AI-driven services and applications, such as fraud detection, credit assessment, and even background checks. AI can now check an individual’s digital footprint to determine the likelihood of them defaulting, and can even categorize clients based on their risk score. In fact, American Banker report that CityBank is investing in the use of AI to fight business payments fraud, and is just one of the many banks looking to do so.
Improved customer experience
With AI, developing a better customer experience is easier than ever. For the generation of people trying to make the most of their busy lives, lining up for hours is simply no longer an option. AI solves this with customer service chatbots, which can address their concerns almost instantly. For instance, the Bank of America has introduced a bot named Erica to help customers discuss their concerns with and give clients information about their transactions, account balances, and much more.
These four are just some of the opportunities that AI can provide within the fintech industry — with more sure to come as the technology continues to develop. These can provide companies with a competitive advantage, complementing what our writer Vernon Queen suggests are the key reasons why fintech is worth investing in, such as tried-and-tested software solutions and cost-saving in product development.
Whether it’s through simple task automation or large-scale algorithmic trading, it’s clear that AI is helping the fintech industry onto a path of innovation and better productivity.