Role of AI in Financial Services

Robo-advisers, chatbots, personal assistants, cognitive computing, machine learning; and so much more. While artificial intelligence (AI) has been around for almost 60 years, it’s finally becoming a part of our lives, in how we bank, get insured, and park our money. Some financial services have already invested in AI, while others are following suit. AI in financial services is likely to be omnipresent with advances in cloud computing, big data, and open-source software set to usher in the change.

AI in financial services, going ahead, would become more effective in merging human insights with automated analysis. Here are the major domains likely to have an impact.

Transactions

Almost all financial transactions are expected to be handled by automated software by 2020, including payment processing and learning from customer behaviors via intelligent payment management. AI will open up a programmable open-source economy and banking, markets, insurance, and crowdfunding will be set free.

Savings

Financial management apps are already using ‘contextual awareness’ that monitors online footprints and spending habits to generate personalized advice. Combining collected financial data along with end-user control to extend customized services, is an ideal AI situation. At the same time, users can spend wisely with intelligent income prediction based on past behavior.

Fraud prevention

Data mining from user interactions can detect abnormal spending, as and when it happens. AI can build individual profiles to expose anomalies in user spending, prevent cyber attacks, and offer scaled-up intuitive intelligence. AI in fraud prevention already includes detection of suspicious phone calls from geo-location spotting and unique caller identification. This technology is currently available in the US and likely to spread across the globe in the near future.

Advice

Robo advisers and AI bots, like Claire, are already using AI to offer personalized banking solutions to Millennials. Robo advisers are estimated to handle $2.2 trillion worth of business by 2020. Though they now operate as a ‘passive asset’ class, bots could soon emerge as a major asset allocation force fueled by technological advances.

Lending

AI in financial services will bolster online lending. Banks, lenders, and brokers can use algorithms to determine credit eligibility. AI can match businesses with the appropriate lender. For instance, AI can connect millennial entrepreneurs to the best peer-to-peer lenders. It can analyze and authenticate user transaction data and carry out income and spend analysis. This helps in highlighting the risk factors used towards a better credit score calculation.

Customer service

Few leading financial services firms in the US and Japan has incorporated AI in customer service. It has helped these firms analyze data, build databanks, make recommendations, and maybe even understand human emotions. Customer service assistance and online automated research could be the most popular bank-bots in the days ahead.

Cross-selling opportunities

AI in financial services strengthens classification and prediction of information. Businesses can take data-driven decisions easier. Financial transaction categorization services can help fintech firms and financial institutions understand transactions executed by customers. A fintech API can process user transactions from their banks, brokerage, credit card provider, loyalty programs, and other utility services and classify raw data into categories like payment method and geo-tagging. This helps merchants identify customer interests and serve their needs.

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