5 ways how Artificial Intelligence (AI) is impacting consumer FinTech
The Financial World stands on the edge of a technological revolution that will fundamentally alter the way people use financial services. FinTech startups are driving the disruption with solutions that can better address customer needs by offering:
- enhanced accessibility to financial services from any place any time,
- convenience and tailored products, especially when we are talking about millennials who are bringing higher degree of customer centricity to the entire financial industry.
Every 10th adult in US is using a FinTech product. In this context, the pursuit of customer centricity has become a main priority and it will help to meet the needs of digital native clientele; i.e. millenials who will own trillions of capital in the next decade. But in this article I would like to focus on Artificial Intelligence and its promise for financial industry and FinTech startups. Artificial Intelligence has experienced hype cycles over the last few decades. However, several things have changed,
a) the cost of computing has declined dramatically;
b) the power of computing has improved exponentially, making AI applications, more practical and accessible for public use;
c) also there is lots of propaganda on democratization of data including financial data.
Here are the several ways of how Artificial Intelligence impacts on consumer FinTech by using the benefites of above listed power of cheap computing and comparably easy accessible data 💻.
1. Artificial Intelligence is processing data to provide better lending decisions for customers of P2P lending FinTech platforms. 👦
There are many P2P lending startups, and very significant part of them are mobile and designed for small consumer loans or student loans. In those platforms the lenders do not have to worry about making a risky decision whether lend or not, as the smart algorithm of a FinTech startup is analising the information and making the decision if the borrower is eligible to borrow.
“PayPal can do a real-time credit score in milliseconds, based on purchase history of Ebay. And you may surprize but it turns out that’s a better source of information then traditional scores.”
2. Supporting investing decisions which are data driven. 💵
There are mobile first investment platforms which are fast and “too real time”. Startups such as Acorns, Robinhood have sophisticated technology based learning and prediction cycles which are running with tons and tons of data to produce predictions for over thousands of assets in miliseconds. This means movement of Artificial Intelligence into the venue of investment decision making, where we previously relied only on humans: financial advisors with certificates. In this field FinTech startups are taking the pie.
3. Helping people to save easily. 💰
I see an increase of consumer centric tool automating the process of savings. Fintech startups such as Qapital or Digit are using the info provided by user’s bank account to learn your spending patterns, bills, and income, in order to construct a unique profile tailored to each persons’ personal finance needs to save money for specific period or concrete goals. Lots of interesting FinTech startups solving this “money saving” problem for millennials have received millions of funding in 2014–2016.
4. Traking expenses and providing more insights on personal finance. 〽
Providing better access to spending insights and expense predictions. These type of tools are not addressing repetitive tasks but rather are doing some judgement based work with complex algorithms and advising people on personal spending behavior when to spend, on what to spend and how frequently to buy a particular item.
20–30% of an average US household’s expenses on groceries, eating out and apparels are impulsive; which means you did not get the same value for the amount of paid money.
5. Insurance contract to claim management becomes smarter and simpler. 🆒
Artificial Intelligence’s initial impact primarily relates to improving efficiencies and automating claim request process. Also helping the potential customers understand the best value-for-money insurance packages rather than non-necessary packages is becoming interesting.
The digitization of financial services will be unlike anything bankers or business has ever experienced before. The explosion of data in financial sector is so vast and overwhelming that it has become impossible to understand it without automated support. And here Artificial Intelligence is entering a new phase from better data driven decisions to leveraging automations to fast and convenient service.
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