With the revolution of AI, the way in which consumers and businesses interact with money has changed radically. This has forced firms in financial sectors to adapt their operations and approach in how they meet consumer needs and leverage AI in order to streamline crucial financial processes and maintain a competitive advantage in finance and banking.
Introduction to AI in Finance and Banking
By now, AI has become a household name for many, however, very few know what AI means and its intangible value for our banking and the world. This evolution of AI has disrupted the finance and banking industry. For example, AI has been crucial in financial securities and detecting fraudulent behaviors or allowing firms to automate stock trading and financial operations. Ultimately, this has changed the way products can be delivered to consumers. In this blog, we will delve into AI technologies and how industries are applying it to their everyday operations.
Key AI Technologies Shaping the Finance Industry
You may have heard of FinTech (aka Financial Technologies) due to its emerging popularity and growth recently. Mainly, the root cause of this is generally due to the new technologies, such as AI, that have allowed new Fintech technologies to be created. Some technologies in FinTech include:
Distributed Ledger Technology (DLT)
The protocols and technical framework that enable concurrent record updating, validation, and access over a networked database. Blockchains are based on Distributed Ledger Technology (DLT), whose infrastructure makes data accessible to just those who require it, minimizes the need for data audits, and lets users see changes and who made them. The main use of this technology lies in the realm of cybersecurity. [+]
Cloud computing
In a nutshell, cloud computing is the how computer programs are distributed across the internet, or “the cloud,” so that the economy gains rapid innovation and possibly higher efficiency. Usually, you only pay for the cloud services you use, which helps you scale your infrastructure as your business needs change, reduce operational expenses, and operate your infrastructure more effectively. [+]
Applications of AI in Banking
As we’ve discussed the technologies essential in the financial sector, you may wonder how these innovations can be applied to real-time banking operations and processes. Some of the main uses within the realm of AI in finance and banking includes: [+]
Customer Service and Chatbots
Financial consultations is one of the most common services in banks on a day-to-day basis and also one that is highly important. With chatbots tailored for finance, banks can automate customer service by allowing these AI bots to respond and guide customers in areas like wealth management, loan options, and basic inquiries. Furthermore, the functionality of these chatbots in finance and banking could extend towards advanced analysis on assets and commodities which can allow for data driven decisions when trading stocks or any type of assets. If used correctly, AI can be a potent tool that can allow people to achieve extraordinary wealth.
Fraud Detection and Prevention
By integrating DLT within banking operations, banks can ensure a safer deposit and lending system to customers and also allow for multi-channel transactions between 2+ bank accounts. This revolutionary technology will diminish a large pain point within the finance industry. [+]
Credit Scoring and Risk Management
By now, credit scores are a common word within finance and accounting due to its role in allowing loans to customers. However, conventional credit scoring processes are highly bureaucratic, wasting precious time and resources for banks. Nowadays, implementation of AI-based credit scoring algorithms. By utilizing essential technologies like machine learning, banks can streamline credit scoring through efficient analysis of data points and trends in order to determine consumer’s credit scores. This allows for an effective risk management strategy where an appropriate loan can be given out to the right people, ensuring consistent debt payments.
Algorithmic Trading and Investment Strategies
Conditions can be created via machine learning and big data as they can analyze previous trends and attempt to predict the future. This hands-free trading strategy allows for enhanced efficiency and an increase in the consistency of trades as human errors are non-existent. [+]
Digital Transformation and AI Adoption in Banking
The widespread adoption of AI within banks worldwide has sparked a new era for growth where customer satisfaction, experience, and engagement are streamlined. For example, integrating AI into their credit and security system as part of their digital transformation allows for a swift solution to productivity problems and gives shareholders a sense of confidence. [+]
AI-Driven Personalization in Finance
Relevance of Personalisation in Banking and Finance
Through personalization, brands could achieve significant value that could propel its growth massively. Personalization could be seen in many ways such as providing tailored services according to audience demographic or specific needs of customers. This all compounds a more seamless experience for both the business and users. [+]
How can it be implemented?
In-built systems created by banks, with the help of AI integration, are designed to analyze large chunks of data relating to a specific customer and allow the provision of tailored services. For example, investment managers utilize AI to assess customers’ risk aversion, environmental concerns, investment targets, and so on to provide the right investment opportunities that fully meet consumer needs and expectations. Another personalization solution provided by AI is the loan recommendation system, which, like the investment recommendation, allows customers to quickly find the most suitable loan options that meet their requirements, thereby enabling a more efficient and less time-consuming process. These factors all contribute to increased revenue for the banks. [+]
Conclusion
To conclude, AI is a powerful technology in the field of finance and banking, and if used correctly, it could be stupendously powerful. We are already seeing the impact AI has on the finance and banking industry, and it’s only a matter of time before it is expected that everyone should have AI integrated within its operations. As we’ve discussed through our blog, AI has a plethora of uses within banking, and with the right guidance and consultation, your business can achieve an extraordinary transformation. At AI Update Central, we offer such services tailored to your business needs.