New advances in technology have pushed many sectors, including finance, to start their digital transformation. Some of the emerging FinTech trends today promise to save time and eliminate headaches from the industry, such as fraudulent activity. The change, driven by breakthroughs in artificial intelligence (AI) and machine learning, will transform the financial services landscape and forever change the future of FinTech. And those who want to remain competitive will need to reinvent their business processes as quickly as possible.
Finance has become a growing market for AI investments
Although the adoption of AI tech in finance is accompanied by several challenges, Microsoft’s Accelerating Competitive Advantage with AI report reveals that global AI investments in the financial sector will reach a value of $5.6 billion in 2019.
The same report also suggests that in the UK, for instance, 72% of finance leaders claim their organizations already use AI. To better handle their finance processes, 52%t said they rely on AI-driven analytics and big data technologies, while 29% use AI voice recognition, and 27% opt for smart digital assistants.
But things aren’t always as perfect as they seem. Microsoft’s report reveals that 60% of employees within the finance industry still need to learn how to use AI in their work. Moreover, 93% of employees admitted they haven’t been informed by their bosses about introducing AI in the workplace.
NatWest bank uses AI to improve customer service
Still, the applications of AI technology shouldn’t be overlooked. If it’s harnessed properly, AI could help finance institutions reduce costs, increase customer engagement, and improve efficiency.
These benefits have encouraged UK’s bank NatWest, to develop “a dedicated AI team”, whose mission is to identify potential solutions that could drive further AI adoption. This proved to be a smart move for NatWest, as Computerworld reveals, one of the issues that the bank’s AI team managed to solve is customer service inquiries. They accomplished this by developing “an email categorization algorithm” that automatically processes customer emails.
An online banking chatbot developed by Floatbot handles customer queries
India’s Andhra Bank is also leveraging AI to improve its customer service. In 2019, the bank decided to partner with a chatbot platform developer called Floatbot. The result of their partnership is a virtual assistant named ABHi. The chatbot was developed for Andhra Bank’s online banking service and solves customer queries in English and Hindi, but the company plans to make the service available in other regional languages as well. Before the chatbot was officially launched, Floatbot tested the system on 50,000 queries.
By detecting fraudulent transactions, AI helps save billions of dollars every year
One of the biggest challenges for today’s financial institutions is finding an effective way to stop fraudulent activity and minimize losses. This is another area where implementing AI-driven systems is a good solution. One such tool is the AI-powered Visa Advanced Authorization (VAA), a risk management tool that’s designed to monitor and analyze transactions in real time.
With the help of machine learning, VAA is able to detect a fraudulent transaction and inform relevant institutions about the issue. Currently, VAA is being used by 8,000 financial institutions from 129 countries, and it’s estimated this tool helps financial institutions save $25 billion in fraud every year.
The financial industry is going through an important AI-driven transformation. Incorporating technology and innovation into financial processes could help banks and other institutions within the industry to cut business costs, reduce fraud, and improve their customer service. As the tech continues to shake up the industry, we’ll be seeing more drastic changes in the future.