Artificial intelligence in fintech—an exciting revolution

Artificial intelligence in fintech is transforming the financial world.

Generative AI has caught the most headlines recently, gaining popularity due to its seamless ability to generate images, videos, and text from prompts. But AI’s reach in the financial world goes much further. 

For companies willing to invest, AI can serve as a powerful differentiator. Due to its ability to democratize access to financial services (additional opportunities to get loans, open accounts, etc.) and foster opportunities for greater financial inclusion (offering better, more comprehensive services for populations in different geographies), we expect to see more strategic implementation of the technology in the near future.

In this post, we’ll discuss:

• Robust use cases for AI in fintech 
• The importance of a well-defined strategy to guide efforts
• What to expect regarding fintech and the role of emerging tech

Use cases for artificial intelligence in fintech

Let’s begin with some powerful use cases of how AI is affecting the financial industry landscape:

• Using AI, fintech companies and banks can grant loans, open bank accounts, and provide personalized attention in record time. Tools such as chatbots and technology solutions, including robotic process automation (RPA), play an integral role.

• AI can also be used to accurately analyze data in financing applications, assessing a person’s risk based on their financial history and behaviors on the web or social networks. 

• AI and ML support numerous elements necessary for the success of open banking, such as detecting fraud, managing risk, and personalizing financial advice for consumers. 

• AI also plays a crucial role in investments and wealth management, allowing stakeholders to analyze large volumes of data to make decisions. 

• Banks seeking to enhance customer experience via branch transformation can leverage AI to reduce operational costs, improve service efficiency, and increase the accuracy of financial advice. When implemented effectively, artificial intelligence in fintech will empower human workers to better serve customers in smart branches and other more traditional financial settings.

• In terms of security, AI can reduce fraud and identity theft by detecting anomalies, analyzing historical behavioral data, monitoring activities in real time, and supporting the accuracy of biometric recognition systems.

Despite the numerous use cases for artificial intelligence in fintech, the data intelligence platform Sling Hub revealed last May that fintech fundraising declined 81 percent compared to the previous year and 42 percent compared to previous months.

There’s a worrying lack of volume of capital in Latin America since July 2020. The underlying reasons? High interest rates and other challenges generated by the pandemic. 

However, rather than seeing the data and turning away from innovation, we recommend that fintech companies and financial organizations use AI as an ally to ensure their survival. That said, technology alone is not enough: human talent is vital to achieve the desired objectives of integrating artificial intelligence in fintech in impactful ways. 

Collaboration between machines and humans is essential since neither can completely replace the other. That is why we emphasize finding the best talent to operate these technologies and educate new generations of users.

Strategic innovation is essential

Designing a strategy that identifies areas where AI can provide greater value is essential. As financial institutions seek to improve customer experience and provide robust fintech product development and product strategies, sound judgment, including AI governance, will be crucial.

Strategic innovation will also require thinking about technology ecosystems rather than one-off implementations. The most powerful artificial intelligence in fintech solutions will encompass other technologies such as machine learning, deep learning, big data, and cloud infrastructure. When leveraging these technologies together, organizations can create even more powerful solutions for customer service, risk assessment, data analysis, portfolio management, investment decision-making, and numerous other use cases.

Artificial intelligence in fintech has immense potential to accelerate an organization’s digital transformation from legacy systems and business models to a more modernized approach. By leveraging AI and related technologies, organizations can maximize operational efficiency, facilitate data-driven decisions, and reduce risks. Due to the potential of fintech solutions to break down traditional financial industry barriers, meaningful transformation isn’t just a possibility but an attainable reality. Organizations that approach innovation strategically and methodically will gain an even more significant advantage.

Artificial intelligence in fintech presents a promising future

Fintech companies will inevitably experience adversities and funding challenges, just as companies across every sector do. But we expect fintechs to remain steadfast, continuing to drive the financial industry’s growth. As banner-bearers of technological acceleration and a source of inspiration for other companies, fintechs highlight the importance of embracing technology strategically en route to a more innovative and prosperous future.

If you’re interested in learning more about our stance on artificial intelligence in fintech at Fresh, let’s connect!

[This article was originally published in Melenio]