How AI Is Transforming The Finance Industry

3 weeks ago 6

AI is having an impact in many areas of finance including AI-enabled chatbots.

getty

The financial industry is well known for being data-driven and embracing emerging technology to provide efficiency, cost savings, detect fraudulent activity and keep operations running smoothly. So, it should come as no surprise that the industry is embracing AI as a tool for innovation and efficiency. Financial firms are using AI in a variety of ways to improve operations, enhance the customer experience, mitigate risks and fraud detection. As AI continues to evolve and the adoption of AI grows, new levels of efficiency, personalization, and monitoring are emerging.

Enhancing Operations with AI

Operational efficiency is critical in the fast paced and competitive world on finance. Companies are continually looking for an edge and AI is proving an important tool. By leveraging AI capabilities, companies are seeing improvements streamlining operations by automating routine tasks, reducing human error, and optimizing processes.

Automation, often called a gateway to AI, is useful for handling repetitive tasks that are highly manual, error prone, and time consuming. Financial firms are finding tremendous value in automation, and in particular robotic process automation. It is being used to handle repetitive tasks such as data entry, document processing, and reporting. These tasks, which once required significant manual effort and time, can now be completed quicker and more accurately by automation, freeing up employees to focus on higher value tasks and more strategic activities.

For example, many previously manual and document-based processes at banks required handling and processing of customer identity documents. With software automation systems, customers can securely upload identity documents to a web-based location. The automation process can use a combination of optical character recognition, natural language processing, and robotic process automation to process the email, properly read and interpret the documents, perform necessary validity and verification steps, and interact with information stored in customer and banking systems. This simplifies the customer interaction with banks, reduces overall processing time, and reduces human errors in the process.

AI is also helping with decision-making processes. In areas where speed and accuracy are critical such as trading, AI is acting as an augmented intelligence tool giving traders additional insights and knowledge to better inform their decision making. AI is not replacing humans, but helping them do their job better. Various tools and platforms such as The Bloomberg Terminal, a popular platform used by many in the financial industry, have integrated AI into the Terminal to augment traders. It’s able to analyze vast amounts of financial data and news in real-time and provide insights that traders can use to optimize their trading strategies. After all, milliseconds matter when it comes to trading and AI assists traders to make better informed trading decisions.

Improving the Customer Experience

We all know from experience what good customer service versus bad customer service feels like. And, when you have bad interactions as a customer, it really creates a sour taste. Because of this many financial institutions strive to achieve a high quality customer experience and AI is now helping deliver personalized, responsive, and convenient services at scale.

When it comes to personal finance, banks are realizing the benefit of providing highly personalized, “hyperpersonalized” experiences for each customer. Not every customer is financially literate or may be looking for personalized suggestions, help, or advice. Generic advice and guidance is ok as a starting point, but it can only take you so far when looking to make decisions about your finances. Now, banks that use AI systems allow them to look at a variety of factors such as spending habits, savings habits, and upcoming life events such as a wedding or big trip to give customers personalized suggestions and help.

Additionally, the conversational pattern of AI is showing tremendous value. AI-enabled chatbots and assistants provide assistance to customers at all times of the day and are able to handle a wide range of tasks, from simple tasks such as checking account balances to more complex tasks like providing financial advice. These bots can provide personalized experiences because it'll look at your information from the bank, so it can help you with gathering information such as checking account balances or providing personalized financial advice. These bots are able to handle a variety of tasks with speed and accuracy and provide an always pleasant tone. In fact, they are becoming so good it can sometimes be hard to tell if you’re talking to a person or bot.

AI-Enabled Risk Management

Managing risk is one of the most critical areas of focus and concern for any financial organization. These companies want to be financially stable, mitigate losses, and maintain customer trust. They also need to comply with various compliance rules and regulations. Traditional risk management assessments often rely on analyzing past data which can be limited in the ability to predict and respond to emerging threats. However, taking advantage of the pattern and anomaly pattern of AI, AI can analyze large volumes of data in real-time, quickly identifying patterns and outliers that could indicate potential risks and areas where humans should take a closer look. Because of these benefits it should come as no surprise that financial companies are leveraging AI to help identify and mitigate risks quicker and more accurately than ever before.

A popular use case for AI is to enhance fraud detection. It’s no surprise that detecting fraud without the help of advanced technology and AI is almost impossible. After all, criminals don’t want to get caught. Fraudsters are always going to try the most advanced, newest things that they can, and traditional non cognitive approaches will not always pick up on that suspicious activity. AI tools can monitor transactions in real-time for unusual patterns that may indicate fraudulent activity, often identifying issues that would go unnoticed by traditional systems. Companies are turning to AI-powered fraud detection systems to safeguard transactions. Advanced algorithms continuously monitor and analyze transaction data, detecting patterns and anomalies that might signal fraudulent activity. By harnessing the power of AI, these companies can quickly identify and mitigate potential threats, ensuring that customer payments remain secure.

AI is also helping manage credit risk. By analyzing a wider range of data points, including social media activity and spending patterns, AI can provide a more accurate assessment of a customer's creditworthiness. This enables lenders to have a more holistic picture of the individual to make better-informed decisions, reducing the risk of defaults as well as extending credit to folks who might not otherwise qualify with traditional measures.

AI is transforming the finance industry, bringing new levels of efficiency, personalization, and monitoring. By streamlining operations, enhancing the customer experience, and mitigating risks and fraud, AI is helping the industry navigate an increasingly complex and dynamic landscape.

Read Entire Article