Artificial intelligence is reshaping the way we interact with our money in the financial industry. New tools (AI in financial industry) are constantly being developing. So, that can streamline & optimise business operations, ranging from credit determinations to quantitative trading and risk management. These tools have the ability to augment the entire process, benefitting everyone involved. From chatbot assistants that help customers seek advice. To fraud detection tools that keep both customers and institutions safer from scammers. AI has the power to augment everyone in the finance industry.
The benefits of AI within finance are becoming more apparent across the industry. The majority of banks (80%) are aware of the potential benefits of AI, with most (75%) seeking to deploy AI solutions soon. Financial institutions (FIs) will accelerate their adoption of AI as a result of technology improvement, improved user accessibility, and reduced cost. By implementing this technology, banks can see great augmentation to their available services to offer.
With critical economic benefits and demand from tech-savvy consumers in mind, financial institutions are implementing AI algorithms across all financial services. So how can AI be used in the Financial Industry?
Financial institutions deal with masses of clients on a daily basis. The scale of people who require assistance means a lot of work needs to be done to address and resolve everyone’s concerns or queries. Done manually, this takes a large workforce to work constantly to help each customer address the same or similar problems regularly. This process is manual, repetitive, and expensive, and is only so effective based on staff skill set, knowledge, and availability.
Fortunately, AI can greatly augment this process, offering exceptional service while simultaneously bringing down operational cost. Using Natural Language processing (NLP) chatbots, financial institutions could address a large scale of customer concerns or queries without the need for manual help in every case (especially when it comes to repetitive queries). These tools can provide quality help and advice 24/7, with a high adaptability to scale of customers, changing information (such as advice on changing bank policies), and required skills (such as language differences). By implementing these tools into the financial industry, organisations can improve the quality of service they offer customers, while also augmenting employees experience by removing repetitive tasks.
Fraud detection and prevention:
Consumers want financial services that offer secure accounts, allowing them to manage their finances with confidence that their transactions protect them. With online payment fraud losses amounting to billions of dollars each year, the need for more effective tactics to mitigate fraud is evident.
Artificial Intelligence can greatly augment the fraud detection process, protecting both consumers and businesses. An AI tool can analyse large datasets of transactions and identify abnormalities or patterns that can go unnoticed by humans. By flagging these abnormalities, AI can effectively detect fraud transactions in real-time, intervening to prevent scam transactions before they successfully take place. By stopping fraudulent transactions from going through, these AI tools can save both the consumer and institution from any loss that would have otherwise taken place.
Assessing Loan risk:
When it comes to offering loans, banks have the difficult role of assessing whether a loan is viable to approve. If this is not done correctly, then organisations run the risk of losing large amounts of money. What’s more, the people that approve or deny loans can be subject to bias, meaning that the decisions can ultimately fall to an individual’s preference, rather than whether the loan is a smart business decision.
AI can help lending organisations make smart data-driven decisions on loans through the smart calculation of loan risks. At its core, weighing up risk for approving a loan ultimately comes down to financial data on the individual. AI-assisted underwriting can assess this data quickly. As well as efficiently to determine the risk value of approving someone a certain type of loan. Not only does this method consider a wide variety of data (including financial trends and historical outcomes). But, it also ignores factors that could play into bias (such as race, gender, etc). By implementing AI into the process of calculating risk. Lending organisations can make smart data-driven decisions for sanctioning loans. Also, protecting the business while simultaneously ensuring applicants are assessed fairly.
The Benefits of Artificial Intelligence in Finance
The benefits of adopting these AI solutions into finance are immeasurable. From task automation to security optimisation, and even personalisation. AI applications through the finance industry can offer so many benefits:
- 1st, Improving customer experience
- 2nd, Removing repetitive tasks
- 3rd, Reducing human error and mitigating human bias
- 4th, Reducing operational costs
- 5th, Reducing risk in loans and trading
With such a competitive market, institutions that invest in these technologies have a great opportunity to offer better services to customers. By improving their operational efficiency, security, and interaction abilities. What’s more, a world evermore at risk of exploitation and fraud. It means that AI-powered security measures are becoming more and more necessary to keep up with the financial sector’s exponential growth and complexity. With the abundance of data available. We have merely scratched the surface of what AI in financial industry can do, and moving forward. And will continue to uncover further value for financial organisations and their customers.
Read also, Importance of Data Center Architect