Artificial Intelligence continues to be a leading technology, as it is becoming an integral part of the different industrial sectors. The technology continues to train the machines just like humans and this is helping to reduce the workload of humans. AI is an innovative technology, capable of training machines just like humans, making it a powerful tool that can be used by the financial and banking sectors in the best possible way. Sources say that it is expected that by the year 2030, AI technology will be a major part of the financial sector, adding a value of $1.2 trillion. The technology is one-of-a-kind, as it is changing the workings of financial and banking institutions, thereby transforming the financial service industry. The financial industry is making the most effective use of this technology, thus paving the way for a bright future for AI in the years ahead.
How Artificial Intelligence is changing the Financial Industry?
The financial industry is such a vast industry that is making use of AI technology for different reasons-
- Customer service- AI chatbots and virtual assistants are doing a great job in banks and other financial institutions. The finance sector deals with a large number of customers, and AI can respond efficiently to all customer queries in real-time. Technology is doing a better job than humans because humans can get tired, whereas AI does not. AI-powered voice assistants can accept voice commands and work with mobile banking apps and smart devices. Virtual assistants can also use Natural Language Processing (NLP) to process complex questions and provide the most suitable answer.
- Wealth management- AI is supporting personalized wealth management in the finance sector by providing the best solutions. AI is capable of analyzing data and market trends, helping it to provide the right suggestions to customers. Having a good knowledge of the data and market insights helps AI to know about investment options for better returns. Personalized wealth management is now possible as AI is now a part of the financial sector.
- Detecting fraud cases- Hackers are always looking for ways to commit fraud, but Artificial Intelligence (AI) makes use of Machine Learning (ML) algorithms and predictive analysis to quickly detect suspicious activity. AI in the financial sector can look for fraud patterns and, upon detection, can stop the action immediately to prevent any loss. Frauds can easily be detected in credit card transactions, which is helpful for the finance sector.
- Automation of regular tasks- AI has the potential to automate several functions, and the financial sector is making use of this technology to a great extent. Examples of this include conversational AI, virtual assistants, and chatbots, which are automating processes in the finance sector. AI and ML together are pushing automated processes in the sector for better working while reducing human pressure.
- Managing bad debt- AI-powered tools are being used for predicting and managing bad debt. AI apps can also help in the quick debt collection process through automated features. AI and ML are aiding the financial sector to improve debt collection and effectiveness.
- Credit risk assessment- Credit risk assessment models are an integral part of the financial industry, and by making use of AI, these models have become more accurate and efficient. Previously, the models were dependent on manual evaluation, but AI with ML algorithms has helped to automate the process.
- Algorithm trading- Algorithm trading has advanced capabilities and this is the reason why it is being used in the finance sector. AI is being used in stock trading to make it quicker and more correct. Decision-making is possible after analyzing data and market trends. Queries of the traders can also be answered via means of chatbots, and virtual assistants and this is how conversational AI is helping in algorithm trading.
- Financial planning- AI-powered platforms can analyze market trends and financial data that help in predicting the financial forecast. The businesses can focus on their financial planning accordingly to achieve the results.
- Financial reports- Financial reports are generated periodically, and AI is helpful for this purpose. AI can easily and quickly analyze large amounts of financial data that covers transactions, account information, and personal information. AI with ML can help in generating automated financial reports with accurate information. Earlier when reports were generated manually there could be few errors but AI can efficiently perform calculations while providing accurate reports.
- Compliance- Compliance is an important part of the financial sector, as it streamlines the regulatory standards and legal obligations for businesses. AI is playing a vital role in bringing changes to the compliance process. One of the leading examples of AI in the banking and finance sector for automating compliance processes is Know Your Customer (KYC). KYC is the process of verifying customers and helps to reduce fraud cases.
Final Say!
Artificial intelligence is indeed an evolving technology that is supporting several business sectors. AI is completely revolutionizing the finance and banking sector by helping with quick automated communication, fraud detection, market analysis, data analysis, safely maintaining confidential records, and automating tasks. AI is training machines in the best possible way to handle all kinds of human tasks, thus reducing the workload of humans while assuring the best results.
Well, just like any other technology, when looking at the advantages, one also wants to know about the drawbacks. Is AI technology a threat to the financial industry, making humans worry about their jobs? Will the future put humans away from the finance and banking sector by bringing AI completely? The answer to this is NO, as AI itself cannot handle the big finance and banking sector on its own; however, a blend of AI technology and humans working together can do wonders to bring about the best results. AI is supporting the finance sector, and it certainly has a bright future ahead.
