How AI is transforming the finance world
Embracing new, innovative technology has been an integral part of the finance world for some time, but AI (Artificial Intelligence) is set to revolutionise the whole industry in ways never seen before. Technical content written by a financial copywriter can’t be replaced by AI, but other functions such as chatbots could play a central role in the future.
Dealing with personal finances and sensitive information means that any AI utilised needs to be accurate, trustworthy and compliant. Consumers have been traditionally wary of AI, but the steady and relentless pace of newer technology has made the public more receptive than in the past.
Here’s a closer look at how AI is being used and transforming the world of finance.
The New Wave of Chatbots
Research shows that while the older generation still prefer to speak to a real person, millennials are far more open to interactions with chatbots. Just 12% of millennials would choose the phone over alternative channels of communication. This provides plenty of scope for chatbots to be fully utilised.
New chatbots are surprisingly sophisticated and able to integrate even into legacy systems as well as social media such as Facebook Messenger. Starting out with a comprehensive range of communication functions, chatbots develop their range the more they interact with customers. Using a combination of natural language processing and machine learning, it’s now possible for chatbots to provide customers with a personalised and tailored response.
Some sources suggest there will be 800,000 chips in use in machine learning throughout global data centres by the end of the year.
A New Approach to Cutting Costs
The competitiveness of the financial sector has seen many companies battling to be the business with the lowest operating costs. While this approach produces large profits, there’s a feeling of companies embarking in a race to the bottom when it comes to customer satisfaction.
AI is transforming all of this by slashing costs dramatically while still delivering a personalised service that puts customers at the forefront. Back-office operations will enjoy better efficiencies and there is instant scaleability, preventing companies becoming victims of their own success.
Companies that don’t invest in AI will get left behind, unable to compete with the speed and scope that AI offers. Adopting AI will therefore spread across the industry, with an increasing number of providers unwilling to concede a competitive edge. For those that don’t have the capacity to create it in-house, they are more likely to become consumers, with other financial companies sharing their AI for profit.
Innovation in Assessing Risk
Accurately assessing and managing risk is an enormous part of every sector in financial services. Whether it’s the need to predict potential fraud or offering correct underwriting decisions for credit applications, the consequences of poorly managed risk are catastrophic.
AI allows companies to draw on big data to identify money laundering and fraud. Some financial companies are already starting to embrace this, but there’s far more that can be done to utilise it fully.
Traditionally, quantitative data is used to make underwriting decisions for products such as loans, credit cards and other types of finance. AI allows qualitative data to be used, too, drawing on information such as the applicant’s online behaviour, work experience and schools attended. This is a radical departure from previous financial practices and is only being made possible by the introduction of AI.
Get Ready for a New World of Finance
Some experts are describing the current move towards AI as the 4th Industrial Revolution. It’s hard to deny the fact that AI will change the world as we know it now, including highly sensitive industries such as financial services.
The above three changes are just the start of the transformations which are set to take place. Many challenges lie ahead, but if successfully navigated, the future for financial services will be an exciting place.
