Role of Artificial Intelligence in Fintech
The role of AI is vital to process massive datasets and automated tasks. This is the reason AI is becoming a part of many businesses. AI will soon be making its way into the financial sector as this sector demands automation in managing data sets. The sector of Fintech is one of the most important sectors which are in high need of AI adaptation. From routine automation to next-generation use of AI, this industry can benefit from AI in several different ways.
Following are the four major platforms that use AI and can be beneficial in the Fintech sector:
1. Credit Analysis and Process Automation
It is usual for every person in business to take a loan from time to time to keep their business moving. The conventional way of taking a loan is to contact the bank, fill out a loan application form, and then wait further for its approval. The bank checks the creditworthiness of the person who is applying for the loan. Bank also checks their credit score and other issues such as bankruptcy and others. The purpose of this is to avoid any inconvenience, but the setback of traditional ways is that the bank lends money to those who don’t need it. This is why most deserving people, students, and people with low credit are left out with the loan policy. This is where AI can become helpful in the Fintech sector by analyzing several people’s data at once.
A lot of banks are adopting AI this technology these days. For example, AI and ML algorithms are developed to help banks create an unbiased credit-scoring model which will allow loans to all deserving people regardless of their race or other issues. These models will enable banks to allot loans to more deserving people and earn more money through this.
2. Easier Access to Fintech Sites
Online financial services sites tend to do business processes, such as cryptocurrency trading and digital/mobile banking. People tend to do online transactions a lot these days. That’s why these services must be available for everyone.
AI made accessibility of sites easier with the introduction of accessible. The company uses various AI algorithms which adapt the system according to the user and make it accessible for him/her. The algorithm is updated every 24 hours to fix any bugs to improve accessibility. To avoid ADA lawsuit risks, the compliance of ADA and WCAG is made sure.
3. Fraud Detection
Unfortunately, fraud is part of the fintech sector as far as the industry exists. Credit-card-related frauds are notorious in the fintech sector. The purpose of the fintech sector is to avoid risks that banks find difficult to avoid. The solution to such problems is to introduce automation in detecting frauds along with human supervision where necessary. AI analyses the spending pattern of the users and notifies the company or the user if there are any suspicious transaction patterns. The AI algorithm is designed to detect any fraudulent activity and to alert the user about it. If AI cannot detect any problem but is suspicious about it, it will hand over the job to the human supervisor, who will check for any red flags. This is how customers are protected from any fraud activities.
Another major issue for the banks is money laundering. Banks, offshore companies, and individuals have a complicated network between them, making it difficult for the human supervisor to track the transaction on every step. Artificial intelligence will make it easier to detect any suspicious activity to be informed on time before any illegal activity can be done. According to the Japanese Fintech sector, the accuracy of fraud detection by AI algorithms is 90%, and it is encouraging local banks to adopt this system.
4. Predictive Market Analysis
Trading in the market is one of the significant sources of income for banks. Equity desks are entirely controlled by automated machines nowadays. Humans are no longer required to do this job anymore. As the trading environment is unpredictable and risky, AI can detect patterns and reduce the risk factor in this sector. This is how the efficiency can be improved. Moreover, banks can tell their customers about the future market position and how their investment will turn out. Banks can use predictive market analysis to present the best products for their customers.
Shortly, AI will play a vital role in every sector of the Fintech industry to improve its efficiency. Day by day, technology is being improved swiftly, and with AI collaborating with Fintech, the future of this sector is very bright.