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7 Ways AI Will Impact FinTech In the Near Future

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Wednesday day, March 12, 2020 / 03:30PM / Content by Molly Crockett / Header Image Credit: InfoWorld

AI has changed many aspects of the way people interact and interface with technology. Tasks that were once performed manually, often at considerable time and cost, are now performed in a fraction of a second due to the advancements in AI technology.

AI is being applied in nearly every field imaginable to improve process, increase productivity, improve customer experience, and lower costs. One of the areas in which AI has been utilized in the Financial Technology (FinTech) sector. Artificial Intelligence will continue to improve FinTech over the coming decade. This article will be an overview of just how this will happen.

ChatBots

Banks and Financial institutions used to be a major source of inconvenience for most people. Whether it meant waiting in line for a bank teller or waiting on hold for a customer service representative, even the most basic inquiries meant devoting a large portion of time to the endeavor. Chatbots have changed this. AI technology is at a point where many basic or common issues can now be solved with ChatBots. This will continue to evolve and improve as the technology becomes more advanced.

Credit Score Calculation

For decades one's FICO score was the end-all for their credit score. Banks and lending institutions would determine an individual's eligibility based almost solely on this score. This is because lenders simply did not have the time to dig deep into a person's credit history and financial situation to make the decision; relying on the credit score was much simpler. Some people are better for certain types of loans than others and this is not always reflected in their credit score. AI technology has changed this. Individuals can now be assessed in much more depth than before in a fraction of the time.

First Time Home Buyers

Many mortgage lenders have adopted AI technologies to search for qualified first time home buyers with a level of success traditional methods did not achieve. The driving force behind this is the fact that Gen Zers, people between 23 and 36 years of age are currently the most motivated to buy a home.

Trading

Algorithm trading is not new, but AI-based trading is. For years trading bots would operate on set in stone rules that dictated what the program was to do given a specific situation. The current trend is taking these algorithm-based programs and incorporating them with AI technology so that they can operate less statically and more dynamically.

These programs are also made in a way that allows the software to learn from past events. If certain trades or setups didn't work what were the conditions they were performed in? The program can use this experience, much the same way a human would, to make more profitable trades.

Accounting Technology

We have already seen the rise of fully automated accounting programs like TurboTax and QuickTax but the future will hold even more advanced and responsive accounting technologies. AI integration will allow programs to perform larger, more complex, accounting procedures they currently are not able to carry out.

Fraud Prevention

Most people have had their card declined or canceled because the issuer felt there was some sort of suspicious activity on the card. These errors are performed by software and not humans and are caused because of the static nature of these fraud prevention programs. FinTech develops more and more fraud detection and prevention systems are being created which use AI technology to better identify fraud.

Risk Assessment

Perhaps one of the largest uses of AI in FinTech can be seen in risk management software. The traditional method of evaluating an investment had bankers or investment specialists looking over data and analyzing fundamental indicators in hopes of determining if the investment was worth the risk or not. With the advancements in AI, software is now being employed to do just that but much faster than humans ever can. It also allows lenders to draw on, and process, a much larger data set than they ever could otherwise.

The future of AI in FinTech is very bright. The world is connected like never before and nowhere is this more evident than in the connectivity of the financial industries around the world. The world runs on finance, it is a central part of our lives. Because of this, we can expect FinTech to be at the forefront of AI research and implementation.

Molly Crockett is an expert marketing and business writer at Academized and Essayroo, where she writes content offering advice to managers looking to optimise their business practices. Molly also tutors at Boomessays, where she regularly seeks to find new ways to help young people to develop their writing and research skills.