Evolution of Artificial Intelligence over the Years
The term Artificial Intelligence has caught the fancy of mankind since the 1950s. Sadly, it’s one of the most misunderstood technologies. For years, people equated AI to be some kind of all-knowing intelligence (the ones we see in science fiction). However, the reality is far different from that.
The term was first coined in 1956 by Professor John McCarthy. To phrase it in simple terms, Artificial Intelligence is a set of advanced algorithms that can perform a task in a way that is similar to human intelligence or exceeding human capabilities.
Artificial intelligence has had huge growth in recent years. It has been used in various applications. And, Fintech firms have recently discovered the benefits of AI. For instance, AI algorithms can assess a borrower’s creditworthiness by sifting through tons of digital data, to determine whether the borrower is eligible for a loan. The best part, AI makes this decision in a jiffy, compared to the days it would take for their human counterparts.
Apart from making seamless and accurate credit-related decisions, Fintech firms have started using AI in several ways.
Let’s look into some areas where artificial intelligence help Fintech Companies
Digital Financial Advisor
This is one of the most well-known and popular uses of AI in Fintech. A digital assistant helps users to navigate their financial plans, track savings, and monitor spending. Reports reveal that when businesses use AI for providing such services, they see a huge increase in user engagement levels, thereby providing users with a significant improvement in their overall experience, which increases conversion rates.
Digital assistants are built using NLP (Natural Language Processing), a type of algorithm that helps processes data in regular human language instead of binary 0s and 1s.
Transaction Search and Visualization
Managers provide access to the transaction data and use NLP to decode client requests. The request could be anything — balance inquiries, spending habits, credit card bills, loan payment schedule, account information and more. Digital assistants make the transaction search easy and less time consuming than human assistants. AI retrieves your bank statement in no time. It can even pull out the lengthy statements in no time.
Client Risk Profile
A critical part of bank and insurance companies’ job is to segregate clients into different profiles on the basis of their credit score. AI is the perfect choice for client profiling. It can categorize clients profile on the basis of their risk score from low to high or any order you want it to be. If it is done by a human assistant it is time-consuming and the accuracy may not be as much as AI.
Underwriting, Pricing and Credit Assessment
Most insurance companies offer underwriting services, especially for investments and loans. AI can instantly analyze the credit profile of a client, and choose the best-suited offer for each client. AI for underwriting service increases the match of the proposals made, providing clients with enhanced user experience. This quickens up the process and reduces the turnaround time of the task.
Automated Claims process
Almost every one of us has faced the tiring process of filling up claim forms. When we want to file a claim on our health insurance or motor insurance, we have to fill up lengthy forms reiterating each of our basic data. This process is lengthy and certainly not pleasing in emergency situations. Digital assistants like transitional bots can make filling up of forms easier with enhancing facilities like image recognition, pay-out prediction and fraud detection.
Churn prediction is highly needed in the insurance sector. Churn is nothing but a key across all industries and business, the company needs to retain clients and to do so, predicting coming churn can be helpful to take preventive actions.
AI provides a prioritized list of clients who have high chances of canceling their policy. The manager can then address the list accordingly, offer the highlighted clients a higher degree of service or improved offering.
Automated Customer Support
AI can give human-like customer services like voice system, text chats, or chatbots. When compared to human customer support agents, AI offers better and faster services for a comparatively lower cost.
Wealth Management for Masses
The smart wallet developed by AI keeps an eye on the user’s behavior and actions. Instructions are given to the user to retrain and alter the finical spending for saving their earnings.
It is an un-denied truth that with technology the secure life of a human is interrupted. Yes, though technology has made it possible for us to finish our bank payments in a few seconds, fraudsters get a fair chance to commit criminal activities. This leaves trusted customers hugely disappointed. AI can solve this issue. The relevant data is collected and the robust security system is developed, more the data, more the accuracy.
Is AI the Future Growth Driver for Fintech Companies?
A big yes! In today’s technology-driven world, companies that are early adopters of technology are the biggest winners. We have seen this again and again. Be it Apple, Amazon or Google, these tech giants are what they are today, thanks to their technological prowess and futuristic thinking.
AI will help Fintech companies achieve faster growth surpassing their competitors. While the first wave of success of Fintech firms was defined by the convenience they offered to customers, the next wave of success for Fintech firms will be determined by AI-backed technologies.
AI is all set to revolutionize the services offered by Fintech firms. It will help Fintech companies take faster and smarter real-time decisions, helping them offer the best experience for customers. If you are a Fintech service provider, it’s time you start looking into AI-backed technologies.