The financial services industry was one of the first to appreciate and start using artificial intelligence. Fintech companies use it to constantly improve the quality of existing services and create new ones. Due to the ubiquity of artificial intelligence, banks, credit, and insurance companies have also adopted this technology to retain customers and their market share.
Financial companies constantly collect comprehensive data about users but do not use it effectively to predict the needs of their clients. They must find ways to combine such valuable information with modern technologies, and artificial intelligence in fintech will help.
WHAT IS ARTIFICIAL INTELLIGENCE (AI)?
Artificial intelligence is a property of intelligent systems and a tool that provides a more intuitive process of human interaction with programs. Artificial intelligence (AI) is increasingly acting as a driver for progress in technology and business. It is widely used in various industries and impacts almost every aspect, including the financial sector. The development of AI is facilitated by the availability of large amounts of data for training and the increase in available computing power. Artificial intelligence is seen as the future of the banking industry, empowering advanced technologies.
THE BENEFITS OF ARTIFICIAL INTELLIGENCE IN FINTECH
Intense competition in the market and new customer requirements have led advanced financial companies to put their trust in artificial intelligence. And it turned out to be a reliable assistant, allowing you to stay ahead of competitors and provide customers with personalized service at a reduced cost. Here are some institutions where technology is helping to modernize old services or provide new ones:
- In banks, AI improves the quality of service by serving customers in real-time. Here, chatbots, voice and virtual assistants are used for informing and money transactions.
- In credit companies, AI quickly identifies individuals, assesses creditworthiness, and identifies fraudsters.
- In insurance companies, AI automates insurance claims, identifies risks, and detects insurance fraud.
AI-based developments help fintech startups to compete with these types of organizations or to establish cooperation with them through B2B. And in B2C, some intermediaries earn on the complex services from many small ones provided by different companies.
In addition to solving financial problems, AI fintech companies can set up any business processes for uninterrupted operation. For example, automate internal procedures, reduce processing time for unstructured and big data, reduce recurring costs, and generate reports. AI quickly acquires knowledge and learns itself, improving human-machine interaction.
CHALLENGES FOR COMPANIES ON THE PATH TO IMPLEMENTING FINTECH AI SOLUTIONS
Price. Organizations in the financial industry are hard to surprise with huge IT budgets. Still, the launch of AI and big data technologies involve significant upfront costs and ongoing maintenance costs.
Talents. Big Data scientists, AI application developers, and computer engineers are hard to come by in the market. Significant advances in AI are taking place in high-tech companies. Their employees have access to knowledge that is not yet taught in universities. They are highly motivated, and it is much more difficult to lure them to work in financial companies than to find the money to implement technology.
Technology. We are at the beginning of the AI revolution, and technology is evolving rapidly. For those investing in AI solutions now, there is a risk of being overtaken by successors who take advantage of better technology. Sufficient funding and a team are the determining factors in this competition.
Time. Even in mature markets and companies adopting the latest technologies for years, most big data projects still require time and effort to prepare and process this data. Patience and perseverance are necessary, but even then, many projects will fail. Time remains the biggest challenge for AI teams.
Leadership. Implementing AI in fintech requires a certain amount of courage from management. You need to understand the possibilities of technology and be prepared for the fact that the result may be completely different. Business leaders do not yet have the knowledge and experience to plan organizational change to implement AI strategically, and they must act today. According to the study, 30% of the representatives of the financial world have only heard of this term, but do not understand how AI works. And today, the entire industry faces an important task: to increase technical literacy.
EXAMPLES OF HOW AI IS ALREADY USED IN FINTECH
Here are some examples that might help to understand why AI is becoming a global trend in the digitalization of the financial sector.
AI-assisted customer scoring reduces application approval time from days to minutes. The cost of scoring decreases, and its quality is growing so that it affects the possible delay.
AI in voice assistants is, firstly, intelligent call routing within the call center. And secondly, it is communication with the client through a voice assistant inside applications. Today, it independently receives up to 80% of calls in intelligent mode and automatically processes 10% without contacting a person. The service time for each customer decreased by an average of 40 seconds. If the voice assistant is implemented correctly, a person waits much less in the voice queue, and if they do, they are routed to an employee.
Another example is intelligent chatbots. These are omnichannel means of communication in which the activity of a living person is imitated. Today, 60% of customer requests are automatically entirely or partially closed by bots. The average time to solve problems on customer requests was reduced by four times.
Also, biometrics and anti-fraud are among the brightest examples of AI in fintech benefits. The first makes it possible to open bank accounts and conduct financial transactions remotely, reducing the time for their implementation while the accuracy of customer identification grows many times. And the use of AI to detect atypical activities makes it possible to stop billions of fraud attempts worldwide every year, thereby saving the funds of both banks and customers.
The use of artificial intelligence in fintech is changing the industry. AI-based technologies allow financial market participants to make real technological breakthroughs in security, personalization of services, business modeling, and many other areas. Insoftex provides practical and timely Fintech software development to help businesses get ahead and stay there.