AI Today — The Growing Impact on The Finance Industry
A few decades back, we came face to face with the new technology, Artificial Intelligence, which we used to read in sci-fi books and stories. At that time people used to wonder how it would be like to see such technologies and tools working in the real world. But artificial intelligence isn’t everything that is physically present; most of the time it “lives” in some line of codes. Stephen Hawkings once said that “It’s tempting to dismiss the notion of such highly intelligent machines as mere science fiction”
AI isn’t specified for robots only, instead, this term is used for all the technologies trying to mimic human intelligence. It can belong to any of these three categories; Machine learning, natural language processing, and cognitive computing. The finance world is transforming and changing rapidly with the disruptive growing technology of Artifical Intelligence and Machine learning.
Finance Industry is one of the highly regulated data-intensive industry. With the emerging Fintechs and digital technologies, traditional banking organizations have started to opt for the latest strategies and policies to cope with their ever-growing customer base. These organizations are now exploring and investing in artificial intelligence and machine learning. This raised trend of AI in the financial industry is showing the changing business landscape even in conservative areas.
Here are some examples that how artificial intelligence is leaving a great impact on the Financial sector.
Strong base for Risk Management:
With every passing day, it is becoming more difficult to neglect the impact of AI services on Risk management in financial institutes. With the help of AI systems, it is quite easy to automatically handle big chunks of data and that too in a short span. Applying cognitive computing principles, both structured and unstructured data can be efficiently managed. This data is further analyzed by the system based on AI algorithms to identify the previous risks associated and any early signs of failure.
Financial businesses can plan based on accurate and detailed risk predictions. To say that Artificial intelligence is a powerful weapon to analyze real-time risks won’t be an understatement.
Artificial Intelligence has proved to be significantly successful in preventing financial fraud and we are hoping that it will eliminate shortly as the machine learning is getting stronger day by day.
In the past few years, multiple credit card fraud cases have come to light that is increasing with every passing day due to the growing e-commerce industry and online transactions. AI-based KYC services are very effective for fraud prevention by verifying user identity through ID verification, face recognition, address, and documentation verification, etc. Not only this but with the help of machine learning practices, the fraud detection systems analyze customer behaviors, purchasing patterns and location. If there is any disturbance or unusual activity, the system triggers the security warning terminating the transaction.
With the implementation of Artifical Intelligence services, banks and other financial institutions can reveal the financial criminals; e.g. money launderers, terrorist fundraisers, etc. With the help of KYC and AML screening, banking systems can recognize suspicious customers and activities. It not only helps companies in cutting the investigation cost but also they are not held liable to regulatory agencies, maintaining the reputation of the organization.
Customers are the most important assets of any institute that make it successful. With the growing competition in the market, companies are striving to provide the best customer support to their clients. Chatbots, backed by AI abilities, is becoming the new center of attention for different banking and financing institutes. Chatbots, also called conversational AI can properly understand the customers’ emotions and converse with them after analyzing according to their situations.
These bots include big data and machine learning which make them capable of responding to customer’s questions whether it is about the transaction or some onboarding concerns. Additionally, after analyzing customers’ interests and behavior, they can effectively handle customer requests and provide them with product recommendations. This technology has caused a great impact on business growth because of improved customer engagement and experience as the customers don’t have to wait long for a response.
Financial Advisory Services — The future of Financial Decision Making:
As the pressure of lessening commission rates on individual investments is increasing on the financial institutions, now machines can overtake it from humans by working on single down payment; which humans don’t do. According to the PWC report, the banking sector is more or less looking forward to “Robo-advisors”
The AI-powered digital or Robo-advisors are now the future of financial decision making. They collect complete information about investor’s financial goals and to what extent they are willing to take a risk and integrate it with macroeconomic data to come up with the best possible advice for the investor after cognitive computation.
AI and Trading:
Many investment companies are now relying on data scientists and machines to depict future patterns in the stock market. The whole selection of domain, trading, and investment is all about the timely prediction of the future market. Artificial intelligence-based machines are doing this job efficiently as through machine learning they can observe the past data and patterns and after analyzing such a huge amount of data in a short period, they can predict the upcoming stock patterns.
Individuals can now depend on AI for decisions; the reason is machine contains all the past data including the anomalies and crisis occurred in previous years. Through machine learning and cognitive computing, the system can trigger a warning in case of any high-risk. This enables the individual to decide when and where to invest, hold or sell the shares.
Today’s AI is all set up for greater economic impact on the Financial industries than ever. From risk assessment and making financial decisions to exceptional customer experience, AI doesn’t only have the potential to revolutionize the finance industry but it helps in improving business health. It won’t be an understatement to say that the future of industries is now dependent on AI.