Just more than 60 years after that day in 1956 when John McCarthy first used the term Artificial Intelligence (AI), it has already become a crucial part of some of the most demanding industries on earth. In finance and banking, forward-thinking business owners and executives are actively exploring new uses for AI to help them get a competitive advantage in the market.
Below are some of the most important benefits and uses of AI in finance and banking:
Artificial Intelligence delivers a more accurate assessment of a credit applicant faster and cheaper than traditional systems. It can also account for more factors and its credit scores are based on more sophisticated and more complex rules than earlier credit scoring systems. AI systems are also completely objective, thus removing personal bias from the equation.
AI systems have been successfully combating financial fraud for several years. Credit card fraud detection systems, for example, study clients’ buying habits, location, and behavior and issue a risk warning when something appears to contradict established spending patterns.
AI systems are also very successful in helping to prevent and detect money laundering, thereby reducing the workload of investigators.
Based on historical interactions, AI systems are able to develop an enhanced understanding of customer behavior. This makes it possible for banks and other financial service providers to offer customized financial services and products by introducing highly personalized features. This in turn helps to build stronger customer relations and to engage more meaningfully with customers.
AI-powered Chatbots can e.g. identify the emotions and context in text chats and reply in the most appropriate manner. This not only improves efficiency but also saves time and money. Voice-based AI systems get smarter on a daily basis, so expect huge advances here.
A number of institutions already use AI-based financial advice apps to help clients achieve their financial goals. These apps track core recurring expenses, income, and spending patterns and then come up with financial tips and even individualized financial plans.
AI systems can apply RPA (Robotic Process Automation) to review and subsequently transform various processes. This makes it possible to automate nearly 80 percent of repetitive jobs, which in turn enables highly skilled workers to use their time more effectively doing work that needs a high level of human involvement.
Over the last few years, there has been a steady increase in data-driven investments. The reason is simple: AI-driven trading systems come with several major benefits. They can monitor both structured data such as spreadsheets and databases, and unstructured data from news reports and social media much faster than humans would be able to.
They are also able to predict future performance more accurately because they can test different trading systems based on all historical data. Some financial institutions already trust Artificial Intelligence systems to manage their complete portfolios.
And a while ago Bloomberg announced Alpaca Forecast AI Prediction Matrix, an AI-powered price prediction application that combines live market data with a highly advanced learning engine that identifies price movement patterns for extremely accurate market predictions.
Drop us a line and we will get back to you