In the fast-paced world of finance, time is (quite literally) money. Lucky, then, AI is increasing efficiency, cutting costs, and helping banks to predict the future.
Artificial Intelligence has brought huge positive change to many industries, and the financial services sector is no exception. According to Microsoft’s Accelerating Competitive Advantage with AI report, 72% of banks, insurance firms and other financial institutions use AI – up 7% from last year.
In fact, finance is embracing AI technology to a higher degree than the national average of 56% and reaping big rewards as a result: organisations already using AI at scale are performing on average 11.5% better than those who are not, and this is up 5% from just one year ago. In short, all those numbers mean great things for financial firms.
Finance is evolving. AI-powered technology such as automation, machine learning, robotics, and analytics have the power to drastically change the business landscape. In this blog, we provide an overview of the unique ways that these innovative technologies can benefit the banking world.
How AI Can Give Businesses a Competitive Edge
Countless financial organisations are investing in cognitive computing, chat bots, personal assistants, and machine learning – all peripherals of artificial intelligence that allow businesses to function more efficiently, manage risk, and make more informed decisions. Some key benefits include:
Dealing with large amounts of data is almost second nature to the financial services industry, as bookkeeping has been a crucial part of the job from the beginning. With the fintech revolution, bookkeeping has been brought into the 21st century through fast-learning artificial intelligence that can analyse huge volumes of data with a reduced chance of mistakes. A recent Microsoft financial industry study revealed that predictive analytics and data interpretation are the most widely used AI tools (52%), indicating that decision makers know the value of AI when it comes to risk management.
Through cognitive computing, fintech organisations can gather a more accurate assessment of a potential borrower, leading to better-informed decisions that are data-backed and devoid of personal bias. Algorithms can analyse the real-time and past activities of any given market, environment, or possible customer to identify early signs of potential future issues. AI-powered credit scoring systems can provide much needed objectivity, accuracy, and efficiency.
Fraud Detection and Management
Artificial Intelligence has been effectively combating financial fraud for many years now and things are only set to improve as current technology develops. With each new development, the industry becomes better equipped to keep up with the criminals that seek to defraud their customers. The increase of ecommerce and online transactions have made vulnerable customers easy targets for hackers and phishing scams, but this challenge can be met with the use of modern technology.
Banks are utilising AI fraud detection systems that can analyse the buying habits of their customers and trigger a security mechanism when they spot odd behaviour that contradicts the spending pattern they’ve become accustomed to. With machine learning, these fraud detection systems improve over time, and can adapt to new information at lightning speed, becoming more accurate at spotting suspicious activity.
Studying the investment market was previously the work of data scientists, but AI is now hot on their heels when it comes to accurately predicting changes in this ever-shifting landscape. Intelligent trading systems can monitor data from spreadsheets and databases, as well as real-world sources like social media and global news.
These systems then processes this data much faster than a human could, looking out for financial patterns from the past in order to determine how these patterns could repeat, and when. An intelligent system can also suggest bespoke portfolio solutions to meet each investor’s risk threshold.
The modern consumer is accustomed to seamless digital experiences and expects nothing less from the financial sector, so it’s easy to understand why they are increasingly dissatisfied by manual back-office operations and are looking to tech-focused businesses that can meet their needs.
When banks incorporate AI functions such as smart chatbots and voice-controlled virtual assistants, users can check balances, schedule payments, look up account activity, and receive self-help solutions, with ease.
Banking apps such as Acorns, Revolut, and Mint use algorithms to help consumers make smart decisions about their money in a user-friendly way. These apps can track income, spending habits, and record recurring expenses such as rent/mortgages and bills, and then use this data to offer personalised financial plans.
The Future of Fintech
The financial services sector is an exciting place to be right now, as AI developments rapidly reshape and revolutionise the business landscape. As more users adopt blockchains and cryptocurrency, we can expect to see increased account security, which could reduce or even eliminate transaction fees.
We can also look forward to seeing smart machines that can execute more complicated tasks, and we’ll surely see the rise of more sophisticated chat bots, as language processing advances. More finance-specific apps and digital assistants are just on the horizon, as more companies will utilise improved cognitive computing to make managing personal finances even easier for their customers.
Established banks looking to modernise their processes will look to the fintech industry to develop digital solutions that make risk assessment and trading more accurate and efficient. For example, Natwest recently announced a collaboration with Microsoft and DreamQuark – an award-winning Deep Learning software company – to create a new platform called Next Generation Complex Analytics. This innovative platform will use artificial intelligence to simulate financial markets in order to spot opportunities and risks, predict financial market patterns, and generate useful insights.
Artificial intelligence is truly driving the finance industry to make progressive steps towards the future in many ways. Although things are only really getting started – it’s still a young technology, despite the attention it receives – a future with increased efficiency, smarter trading, and excellent customer experience will no-doubt be a bright one, and with the help of AI, we’re heading towards it at an exponential rate.
To find out how we work hand-in-hand with the financial services sector to provide AI solutions that can revolutionise your business, please contact a member of our dedicated team.