AI and ML in FinTech: Revolutionizing Banking and Financial Services
July 11, 2020
“Alexa, transfer €70 to Peter.”
Payments are going to be this simple very soon. You will have a smart robot telling you where to invest in, and providing you with personalized recommendations to manage your finances. All thanks to emerging FinTechs that are applying futuristic technologies and solutions.
The financial services sector has been one of the early adopters of emerging technologies and new business models. As a result of ground-breaking innovations, new FinTech startups pop up every day, all around the world.
According to the UK FinTech State of the Nation report, there are more than 1600 FinTech solution providers in the UK currently, and it is estimated to double by 2030. These FinTechs and players in the BFSI sector take advantage of technologies such as Artificial Intelligence, Machine Learning, Blockchain, IoT, etc. to make payments and financial activities effective, easier, and secure.
Here are some AI and ML use cases in Banking and FinTech:
JP Morgan uses Artificial Intelligence to analyse and automate loan agreement processes.
City Bank uses an AI-based product to detect and fight fraud in online banking
Many FinTech startups use AI for consulting services, fraud detection, finance management, transaction assistance, etc.
Read on to find out how FinTechs and financial services can leverage the power of Artificial Intelligence and Machine Learning to anticipate future needs, be more customer-centric, and simplify and add efficiency to routine FinTech processes.
Applications of AI and ML in FinTech
AI-powered bots can act as a financial coach or advisor for your financial services business. These are digital assistants helping customers with their financial planning, spending and savings. Built using machine learning models and Natural Language Processing (NLP), transactional bots improve user engagement and the experience of interacting with the financial service provider.
It can process data in a natural format and recommend services and insurance plans based on the customers’ transaction history.
AI and machine learning algorithms track the customers’ transaction history, their location, time of transfer, amounts and merchant or vendor details. It then uses this information to identify any uncommon behaviour contradicting regular transaction patterns. In case of discrepancy, the ML algorithms will alert the system for fraud. AI-driven systems can also detect loopholes in the system’s security and help in detecting and preventing network intrusion and cyber fraud in advance.
The financial services and insurance industry involve a lot of time-consuming manual tasks. AI and machine learning systems can automate these processes and aid in transforming the user experience. Features such as fraud detection, image recognition and pay-out prediction help in upgrading the entire customer journey with faster execution and fewer errors. It reduces operational tasks by automating insurance claims processes.
Many FinTechs also utilise AI to analyse loan borrowers’ characteristics by sifting data from their browser history, location data, social media profiles, cell phone usage, utility bills, etc. This data is then utilised to estimate the credit scores and reliability of the customers.
Poor customer service or wrong advice can lead to loss of customers. Virtual assistants and chatbots can have real-time access to customers’ accounts, give them personalized recommendations and help them in managing their savings. This will help FinTechs in providing personalized 24/7 support to their customers, and reduce the chances of wrong advice, errors, or poor customer service.
AI-ML solutions in the financial services industry can help in improving business processes and increasing customer satisfaction. It helps your FinTech business in gaining a competitive edge in the disrupted era.
Want to implement these emerging technologies in your financial business? Gateway Digital is an end-to-end solution provider catering to various BFSI and FinTech companies across the globe. With our in-depth domain capabilities and technology implementations for 150+ projects, we have emerged as a reliable technology partner and market leader for major banking and finance players.