Artificial intelligence (AI) has many applications in the fintech sector that are the driving force for amazing innovation. AI in Fintech is all about capturing the massive amounts of data available and processing it in such a way as to make it much more useful. Improvements are rapidly being achieved for consumer use that offers individually-tailored control over finances.
AI can offer consumers financial products and services based on their needs. The data analysis of Big Data helps create new products and services based on what consumers want. With these powerful AI systems, the marketing of financial products will be more about the response to an identified demand than trying to build up demand through advertising campaigns.
For Fintech businesses, AI increases efficiency and provides valuable business intelligence that can be used to make better executive decisions about what products or services to offer and how best to sell them.
Lower Barriers to Market-Entry and Increased Competition
The proliferation of AI used for data mining and the open source nature of some AI programming is helping to make sure the AI is not controlled only by big governments and multi-national enterprises.
This open-source AI allows the algorithms to be used by smaller companies who associate with other companies to leverage their offerings of financial products and services. This helps them compete with much larger companies on an equal playing field.
AI Makes Fintech More Convenient
Smartphone applications are enhanced by AI in many ways that are already practical. An example is an augmented reality application that works by the user simply capturing the image of the street that they are on. Then, in real-time, the AI software pinpoints the location and places an overlay on the image.
This augmented reality overlay shows where the nearest bank branch or ATM is located. It uses GPS positioning to guide the person to where they want to go and tells them if a bank branch is open near their location.
Improved User Experiences
The user experience drives the success stories of AI applications. Any consumer financial product or service that fails to achieve a top five-star ranking in the user reviews will not prosper. The goals of Fintech companies are using AI in ways that are seamless and fast. The application needs to bring new users into the system quickly and get them up and running automatically.
User interfaces need to be intuitive and so much more than that. They need to anticipate a user’s needs and interests in order to provide fun and easy ways to learn more about financial products and services. The goal is to use AI to create an experience of personalized service that is customized for their needs.
AI-Enhanced Fintech Applications
The megatrend with AI fintech applications is that the mundane is done automatically behind-the-scenes and it is performed in a 100% error-free way. For example, smartphones are linked directly to a user’s bank account. Their bank balance up-dated in real-time. A simple-to-use interface shows all the transactions as they happen. This means there is no further need to balance a checking account.
Another application, which improves personal finance can generate a budget using AI data mining and the analysis of a person’s spending habits. When using this budgetary control system, if an item is outside the parameters of the allowed budget, the system warns the user to reconsider making the purchase. This is very effective in controlling spending, especially for non-essential items.
For Fintech businesses, AI is already being used for the data mining and analysis of Big Data to improve business intelligence. AI improves predictive analytics that helps executives make better decisions and, in many cases, can make autonomous decisions more efficiently with little need for human supervision. For example, AI improves the performance of Fintech businesses by increasing payment transaction processing speed with more accurate fraud detection
AI Advisory and Fintech Concierge Systems
AI now is being used to create very personalized help and give sound financial advice. For example, robotic advisors assist investors who trade stocks, bonds, commodities, and currencies (both legal tender and cryptocurrencies).
Some AI trading systems use algorithms to manage high-volume trading autonomously. Other systems, called “Robo-advisors” simply make trade recommendations that are then used by an investor to help them better manage their financial portfolio
Having a robo-advisor is like having a personal fund manager working on the investor’s portfolio, except there are no commissions to pay. These systems are available as monthly SaaS subscriptions that can be turned on or off easily. They build up their client base by making successful and helpful trading recommendations.
This means that the programmers of these systems are motivated to make them show high-performance financial results in order to attract new clients. There are even cryptocurrency derivatives that use AI, such as the Bitcoin Halo Option, which limit the downside risk of investing in cryptocurrencies.
Improved Security with Fintech Blockchain
AI will play a role in the major implementation of blockchain technology. This B2B application of blockchain technology is used between trading partners to produce a permanent record of complex financial transactions, such as those used to finance global trading.
There are many Fintech AI startups working in this area. Major companies like Samsung are committing tens of billions of dollars in investment funds to this effort.
The strongest trend for AI Fintech applications for consumers will be the bundling of financial products and services. AI Fintech offers products and services in ways that are more convenient, personalized, and easy to access.
For businesses in Fintech, AI is already playing a major role in providing and improving these services. AI will also help discover new needs and markets for innovative financial products.