With Fintech, financial services are becoming more accessible, convenient, and efficient than ever before. Plus, the industry is constantly evolving with new and exciting technologies being introduced all the time.
What's even more exciting about Fintech is the incorporation of AI or artificial intelligence. The fintech AI industry was worth a whopping $7.91 billion in 2020, and it's only expected to grow from there. By 2026, experts predict it will be worth an incredible $26.67 billion! That's a huge jump in just a few years. Also, according to a report by ResearchAndMarkets, the market is projected to grow at a CAGR of 23.17% during this period.
By leveraging the power of AI, Fintech companies are able to provide even more innovative and personalized financial services. The possibilities are endless and we can't wait to see what the future of Fintech holds!
How is AI used in Fintech? Let’s dive right into it
AI applications help businesses to process and analyze large amounts of data quickly and accurately. Thus, financial institutions are able to make better decisions and offer improved services to customers.
AI makes money
AI can be used to build credit scoring models and prediction algorithms that increase profitability of businesses. Correctly built models can be more effective than whole teams of professionals - and can massively increase ROI by offering your clients more attractive products they really need.
One of the most significant benefits is that AI helps to increase efficiency by automating time-consuming and repetitive tasks, like data entry, risk analysis, and fraud detection. This frees up financial service providers to focus on more exciting and strategic tasks, like developing new products and services and providing a better customer experience.
Another fantastic advantage of AI in the fintech industry is the ability to personalize financial products for customers. By analyzing customer data, AI algorithms can provide personalized investment portfolios, loan offers, insurance policies, and other financial products that are tailored to the individual needs of each customer.
Let us give you an example of how AI can personalize financial products for customers. An AI-driven robo-advisor can create a customized investment portfolio based on a client's risk tolerance, financial goals, and investment horizon, making sure that the investment options align with the client's individual preferences. Additionally, AI algorithms can evaluate a customer's credit history, income, and other financial information to offer personalized loan and credit card offers, ensuring that they are getting the best options available that meet their specific financial needs. Just WOW!
Personalization can not only benefit customers, but it can also enhance their overall experience with a financial service provider. By getting offers of products and services that meet their individual needs, customers are more likely to be satisfied, leading to increased loyalty and retention. In other words, when financial service providers use AI to personalize their offerings, customers feel more valued, and this can lead to stronger relationships between the provider and their customers.
When it comes to detecting fraud, AI plays a big role. By rapidly analyzing massive volumes of financial data, AI can identify fraudulent activities and help prevent them from happening. This means that financial services are more generally secure, and fraud is less likely to occur, giving customers peace of mind that their money is safe.
Besides, just like a personal adviser, AI can also provide businesses with data-driven projections and insights that can help them make better decisions. For example, an AI-powered credit scoring system can analyze credit history, loan applications, and other relevant data to determine whether to approve or deny a loan. This can help to make more accurate lending decisions, ultimately resulting in better outcomes for both the business and the customer.
A prime example of how AI is used in fintech is chatbots for customer support. Have you ever used a chatbot? We are 99% sure that the answer is yes.
Chatbots are becoming increasingly popular in the industry as a way to provide personalized advice. They use artificial intelligence to analyze customer data and provide customized financial services and recommendations This means that customers can get the help they need without having to wait for human assistance. Chatbots can help you open an account, check your account balance, and even give you investment advice. Plus, chatbots can learn from their interactions, continually improving the quality of their responses over time.
And the best part is that they're available around the clock, so you can get help whenever you need it. No more waiting on hold or trying to schedule a call with a customer service representative.
You already know that chatbots are incredibly useful, but it's important to note that they have limitations. For instance, chatbots may not be able to handle every issue and could provide inaccurate information from time to time. In those cases, you may need to reach out to a human representative for further assistance. However, it is still a great advantage - as it may reduce the number of people needed in support tenfold - and save thousands of hours for both your clients and employees.
Despite these limitations, chatbots are a great tool for improving the customer experience in fintech. They offer quick and easy access to financial services and can help you manage your finances more efficiently. Chatbots are available 24/7 and can help with routine queries, such as balance inquiries, transaction history, and account management. By using chatbots, you can save time and effort, and focus on the things that matter most to you. Isn't it amazing?
Nothing is perfect. What are the challenges of using AI in Fintech?
While AI can be incredibly powerful, it's important to consider potential risks and limitations to ensure that it's being used effectively and responsibly. So, ready to learn about them? Here we go.
Possibility of prejudice in AI systems
Biased data can lead to skewed results when used to train AI systems, potentially affecting certain demographic groups such as minorities or those with low incomes. That's why it's important to recognize and address these potential biases to ensure that AI is used fairly and inclusively.
Poor data quality
Sometimes it's possible to encounter large amounts of unstructured data that can pose a challenge. However, it's important to remember that quality data sets are crucial for the effectiveness of AI solutions in Fintech. And to get the most out of AI, it's essential to ensure that data is properly cleaned and structured for optimal use. And that's it!
Also, we recommending reading our guide on Black-Box AI challenge.
We're confident that the advantages of using AI in fintech market outweigh the possible difficulties it may pose
By leveraging AI-powered solutions financial organizations can increase productivity, provide personalized financial services, enhance customer experiences, improve fraud detection, and make data-driven decisions with ease. How cool is this?
Innovate Data Extraction and take it to the next level
One of the key AI use cases for completely innovating the financial sector is data extraction software. Our team has expertise in data extraction solutions that utilize cutting-edge AI and machine learning technologies. Say goodbye to manual data entry and errors - our solutions offer quick, effective, and precise data extraction. AI-based data extraction streamlines operations and let businesses stay ahead in the fintech industry.
Imagine you need to extract certain financial information from an annual report of a corporation. With the help of our solution, you can quickly accomplish this and transform the data into a structured format for straightforward analysis. Better decisions, better customer interactions, and greater corporate efficiency follow this. Pretty impressive, isn't it?
And do you know what is the best part? Our Data Extraction solution can be tailored to your specific requirements. We will work with you to develop a solution to match your needs if you want to extract data from a specific type of document that isn't currently supported by it. Learn more from the demo.
At Tensorway, we're big believers in the power of AI and machine learning. By utilizing the newest technologies, we hope to assist firms in the Fintech sector in streamlining processes, improving customer satisfaction, and achieving their objectives. So if you're searching for a solution to assist you in rapidly and accurately processing and analyzing enormous volumes of data, you know what to do!
Chatbot is a conversational application you may often see on all kinds of websites as a chat window, usually in the bottom right of the screen.
Data extraction using AI refers to the automatic identification and extraction of relevant information from unstructured or semi-structured data sources, such as text documents or images.
White Label AI
In the AI world, white label AI solutions are ready-made solutions sold under different brand names.