Intelligent Technology: Making Fintech Smarter

The financial industry was one of the first to adopt and appreciate the benefits of artificial intelligence (AI). The annual budgets of large banks amount up to billions of dollars, which is comparable to the state budgets of some developing nations. No surprise that banks and financial organizations will be the key drivers of AI R&D in the FinTech industry. From amplifying customer service to transforming wealth management, financial institutions appear to be waking up to the reality that intelligent technology will be a driving force in the digitization of the financial sector. They will also be the ones to bridge the AI knowledge gaps across other industries and support the FinTech business ecosystem.

The largest and most successful credit organizations have already created official AI strategies.

The majority of the strategies imply that internal or outsourced AI departments and teams be launched. As per the forecast of Autonomous Research, by 2030, Intelligent technologies will enable banks to decrease operating costs by 22%. In the long-run savings of financial institutions can reach $1 trillion.

Simultaneously, an acute problem for large banks is the absence of qualified AI developers and data analytics specialists. The lack of developers can hinder the development of technology in many sectors, with FinTech being damaged the most.

The previous wave of FinTech startups and customer applications in the field of financial services was associated with the proliferation of smartphones. At around the same period, the term “FinTech” itself emerged. Smartphones permitted FinTech projects and leading banks to take advantage of customer location determination, encryption, secure remote access, digital signature, etc. As public and private cloud computing platforms came into existance, work with financial data became streamlined and facilitated.

AI and FinTech

Artificial Intelligence gave birth to a new wave of applications and services in the market of finance. Since AI can handle unstructured data such as images, audio, video, location, and time-series data perfectly well, there are AI-based solutions already that are capable to detect fraud, assess creditworthiness and risks, recognize an individual based on his/her digital footprints, etc. In the insurance sector, they help automate claims cases, identify insurance fraud, and improve risk management.

By utilizing AI-driven chatbots, banks can take their customer experiences and customer relationships to the next level of maturity, as they help personalize UX in real-time and in the most proficient way ever.

Another AI product category that is extremely popular among banks, and financial organizations is a virtual assistant. Just like bots, they help walk the client through the services and products of the bank and, thus, improve the user journey, provide insights and set specific calls-to-action to increase goal conversions.

Let’s have a look at some of the most exciting Intelligent Technology initiatives launched by banks and financial organizations.

How Banks take advantage of Intelligent Technologies

FinTech has taught banks to be customer-centric and to foresee future needs. Just like Tesla is something more than just a vehicle, so are banking services, they become whole ecosystems. As clients, we are fortunate, at this moment, someone is creating a new smart robot consultant which will tell you who to invest in and will utilize the voice of your dad to make the recommendation as personalized as possible. That is the manner in which AI helps banks and FinTech startups gain a competitive edge and make a difference when it comes to customer experience.

JP Morgan: utilizes Artificial Intelligence to automate the analysis of loan agreements. The bank recently launched the COiN (Contract Intelligence platform) which enables clients to analyze such agreements, highlight the important terms and conditions, as well as significant data. Formerly, this work required 360 thousand man-hours to complete.

Wells Fargo: announced the formation of an exclusive team for Intelligent technology that will be engaged in developing innovative payment technologies and improving services for its corporate clients. Specifically, the AI team of Wells Fargo will work on creating technology that can help the bank provide more personalized online customer service.

Current projects assigned to the AI team of banks range from systems that can detect payment frauds or misconduct by employees to technology that can make more personal recommendations on financial products to clients.

Bank of America launched Erica, an AI-based virtual assistant that is planned to be integrated into a mobile application and various ATMs all over the country.

Citi Bank: has recently invested in numerous AI-based projects and startups like Feedzai that uses AI to detect and fight fraud in online banking. Another example is an organization called Clarity Money that leverages the power of Artificial Intelligence to help clients choose financial products and manage their assets.

As per a press release, ‘The machine learning technology of Feedzai will automatically adapt controls to monitor discrepancies and changes in the payment behavior of a customer, allowing for the analysis and recognization of potential aberration in affected payments before they are forwarded for clearing. It will do this while securing that payments are processed quickly and efficiently’. Citi foresees to launch its innovative solution very soon.

How FinTech Startups Leverage Intelligent Technology

The industry of financial services is desirable for startups. Some of them endeavor to make a revolution in traditional banking, while others tend to empower banks to improve their products with the latest and advanced services. There are numerous AI use cases from the world of FinTech startups: from personal finance management to transaction assistance to fraud detection and consulting services, and so on.

Comparing the behavior of consumers with a vast array of historical data, we can identify the minute details and prevent cyber fraud in advance. Intelligent tools are consistently being trained and improved as they aggregate data and get upgrades.

AI-based consulting robots can help in decreasing risks for customers by suggesting them suitable financial products and objects for investment via a variety of information sources.

Especially promising for FinTech startups is the sphere of personal finance management. There are already numerous successful startups here such as Mint and Wallet.

These platforms can gather information about personal finances, track data over time and make informed decisions and suggestions. They are convenient to utilize and will suit even the individuals who previously couldn’t have the patience to monitor their expenses and income.

The Most Promising Intelligent Technology Startups in the Financial Sector

DreamQuark: is a platform for creating and designing AI applications specifically for the banking and insurance sectors. It can be utilized for product selection, fraud detection, customer segmentation, credit scoring, and credit check.

Alpaca: helps make predictions of occasions in the financial market. For their market forecasting models, they use in-depth high-frequency data training to identify typical scenarios that demonstrate price changes. They developed MarketStore, a highly scalable, exclusive database server optimized for working with time series of financial data. Presently, this software is entirely open-source.

DataVisor: utilizes AI to detect fraud and other financial crimes. The organization applies unsupervised machine learning models to discover previously unknown fraudulent schemes. As a result, companies that utilize DataVisor products report their performance to be 50% more efficient than that of competitors.

Quantexa: is another exciting FinTech startup. It utilizes AI to predict risks of default, proactively identify fraud and create profiles of both unscrupulous actors and trustworthy customers, as well as depict the links between them.

How Intelligent Technology can be used to improve compliance

Business functions such as compliance, which in the past depended upon rules-based systems, are ripe for the utilization of AI. This has been a key driver of recent innovations in RegTech (regulatory technologies). Rules-based systems produce enormous quantities of “noise” immense amounts of unstructured and mostly irrelevant information that people need to review manually, creating a considerable day-to-day burden for even the largest of compliance teams. By automating simple tasks like real-time scanning of changes to Sanctions and Watchlists workloads can be essentially reduced. Smart systems that learn from your decisions can also significantly decrease the number of ‘false positives’ i.e. incorrect risk alerts produced by searches, in some cases upto 60%.

Insurance and AI

Insurance is the latest industry to get the ‘Tech treatment’. InsurTech is rapidly developing as organizations recognize the most ideal ways artificial intelligence could be used to improve the industry. At FinTech Connect one of the speakers stated that this would initially take the form of utilizing chatbots and virtual brokers to improve customer engagement and services. Looking to the future the utilization of AI in insurance could be even more transformative.

InsurTech could be utilized to essentially decrease the level of insurance fraud. By digitizing the claims procedure not only will it be easier for the client to make claims but during the assessment, computers will be able to make estimations that are more precise and that identify fraud at an earlier stage. AI in insurance will additionally utilize to spot suspicious behavioral patterns which could signify fraudulent activity, Shift Technology is one such organization utilizing AI for this exact purpose. The utilization of smart systems in insurance is still particularly in its infancy but is definitely a field to watch.