The financial sector has been among the first to adopt emerging technologies and innovative business models. As we can see, one of its finest results is financial technology, popularly dubbed fintech.
Fintech has more famously indulged in rearing digital money, or what we know as cryptocurrency. Cryptocurrencies like Bitcoin help people have easy cashless transactions and invest and earn profit. By upgrading finance and the way it works digitally, fintech has changed the way of monetary transactions in today's world. AI and machine learning have opened up multiple opportunities to people through several payment interfaces, investment opportunities, and digital currency applications.
This blog will explore the various ways AI and ML have impacted fintech and changed the way the finance sector works.
How AI has affected the growth of fintech
AI is simply information and knowledge processed by machines instead of humans, thus creating and yielding near-perfect results.
AI in the finance industry has significantly improved its operation in many ways. AI minimises human involvement, thus ruling out incautious mistakes. It is time-effective and can upgrade the productivity of a business with its many advantages.
Since the Covid-19 lockdown, the world has become dependent on technology for survival. Transacting any amount of money online, small or large, is commonplace. AI in such a scenario allows for security and helps any company design better financial schemes based on customer needs and economic trends.
Why AI is needed in finance
One cannot do without AI when dealing with money online to avoid risks as well as to ensure effectiveness and fulfilment of the consumer’s needs. These are four ways in which AI helps in fintech:
- Safety: AI is designed to predict any kind of fraudulent behaviour and can save an organisation from any monetary loss or bankruptcy.
- Efficiency: AI is undoubtedly more efficient at handling and completing any task before the stipulated time. It offers better processing of a wide range of data compared to humans.
- Helping Customers: Every company offers AI-powered chatboxes designed to listen to each customer's specific needs and solve their problems.
- Digital Money and Investment: Crypto has added a new dimension to the stock market. AI has propelled several applications that present interested customers with every required advice and fundamentals of investing online.
Why machine learning in fintech is indispensable
Machine learning is when a machine is fed data and instructions to yield correct responses based on what it has learnt.
Machine learning comes under AI, and it vastly improves accuracy and saves time.
Here’s how machine learning keeps improving fintech
- Credit scoring: Machine learning makes it easy to validate a borrower’s credibility by analysing their history. From demographics to their salary, the kind of transactions they have had, and their credit history, everything is examined to deduce a person's credit score before lending them money.
- Intercepting fraud: From voice phishing to online scams, money swindling is a common occurrence. Machine learning operates via an algorithm that looks at a person's entire history and the different ways of their expenditure and reports any suspicious behaviour. This way, the system remains unhackable and intact. To ensure utmost honesty, it also facilitates uploading an ID for the Know Your Customer (KYC) operation to be certain of the identity of the customer.
- Monetary advice: Machine learning employs a number of systems to help a customer with their financial decisions. Here, we have robo-advisors, an application that provides the customer with a list of pros and cons regarding their queries, helps them identify risks and makes sure to eliminate loss and enhance profit, security and greater investments based on what the customer wants.
Machine learning in fintech also enhanced the operations in banking sectors and online money trading through various innovations and high-end systems. It is an irreplaceable part of fintech. With more and more developments every day, AI and ML’s significant contributions to fintech are felt worldwide.
From Google Pay to Paytm, even the smallest businesses conduct transactions online. Businesses and apps encourage customers to pay online to avoid any hassle of finding the exact amount of cash. Thus fintech is an industry that will only grow further in the coming years with the upgradation and innovation of technologies and newer cryptocurrencies.
However, for a successful career in fintech, an in-depth knowledge of AI and machine learning is a must. Ride in the wave of innovation with Imarticus’ MBA in fintech presented by KLU. Besides fundamental knowledge of money trade, technology and its vast range of usage, the programme deploys Harvard case methodology to develop problem-solving, analytical and decision-making skills in adverse situations. Check out the website for other course-related details.