AI in Financial Sector

Artificial intelligence (AI) is the ability of an intelligent machine such as a high performance computer or a fully automatic robot to do tasks that require human intelligence and discernment.

With the advent of the 21st century, AI along with Machine learning and Data science have made inroads in almost all application domains that eventually made AI detector a must!

Finance is one field where AI has shown a lot of promise. Artificial Intelligence is already widely deployed in financial services. It can give great results if companies deploy it with sufficient diligence, prudence, and care.

AI can help automate financial services with a prominent end user or customer interface

It has immediate effect in front office work such as instance online banking, online insurance, e-commerce of financial products and services.

AI is increasingly deployed in a number of specific applications such as risk management, alpha generation and stewardship in asset management, chatbots and virtual assistants, underwriting, relationship manager augmentation, fraud detection, and algorithmic trading. In the insurance domain, AI is integrated in core support practices and customer-facing activities. AI is increasingly integrated in the hiring process.

Financial sector is seeing demand for a lot of innovative products and services and a massive change in core processes with the most prominent among them being an increase in the provision of customer-centered services. Thus most financial institutions are investing in technology and restructuring their services and how their businesses operate.

AI works very well for big data analytics in detecting market events and then acting on the mined inferences to make trading decisions. This has immediate back office impact in areas such as portfolio management, high frequency trading, etc.

AI can super-charge financial services and transform the way services are delivered to customers in modern times. AI can help create more informed and tailored products and services, AI can improve efficiency of internal processes, AI can enhance cyber security while reducing associated risk. In the current era with all computational enhancements, almost all sectors are witnessing path breaking innovating changes and the financial sector is no different.

A new term called “Fintech” is coined to denote the connection between financial institutions and technology. This term gained traction especially after the blockchain and cryptocurrency innovation. These technologies together with artificial intelligence are one of those innovative technologies that are bound to revolutionize the Fintech industry. Nowadays, startup Fintech companies that are emerging by day will redefine the future and AI technology applications will set the stage for business to enhance competitiveness and boost sales. In future time, Artificial Intelligence will assist financial companies to boost their income, minimize risk, and increase their proceeds whether in banking, trading, investing lending, or the fintech industry.

AI offers many benefits for financial services. It can enhance efficiency and productivity through automation; reduce human biases and errors caused by psychological or emotional factors; and improve the quality and conciseness of management information by spotting either anomalies or longer-term trends that cannot be easily picked up by current reporting methods. Let us explore the benefits offered by AI in the financial industry in greater depth.

The biggest benefit offered by AI is resource maximization. AI can greatly help financial service companies to save time, money and manpower. High computing machines powered by AI algorithms are utilized to analyze data, generate insights, enhance customer service, and predict sales performance and boost sales.

Adoption of highly efficient AI algorithms and automation. 

AI can automate manual and time intensive tasks such as data records matching, data analyses and more using machine learning and statistical analysis. AI has the capacity to replace human decision making with more refined technologies given its capacity for continual learning and improving its algorithms. AI algorithms are beneficial to companies as it makes the task of accessing big data and processing it for useful insight much more effective.

AI powered machines can seamlessly manage different types of data including parameters and numbers and can easily analyze, interpret data, and write text with the same efficiency as humans do. AI equally helps in image recognition, pattern detection and scene understanding which can greatly help in fraud detection.

Another major benefit area is Information filtering and sentiment analysis. AI can save time and effort of a worker by filtering major events from a large data set sourced from different locations. This way the worker can be far more efficient to draw conclusions or actionable insights from a limited set of events data. For e.g. Reuters News Tracer, utilizes Machine Learning algorithms to filter tweets and gather some breaking news before it’s announced anywhere. Financial institutions dealing with products can utilize AI to identify brand sentiment from social media and text data, analyze it, and convert it into useful business insights. For e.g. they can introduce new features based on the common trends and opinions coming from its target customer base.

A relatively new benefit area from AI is hiring and talent retention. AI is increasingly adopted in hiring in some form or the other in almost all sectors. Right from short listing to final scrutiny, AI is now getting integrated in the hiring pipeline. The HR is using AI frameworks to detect the employees having grievances with the management. This helps HR make early intervention and retain talent by solving his or her grievances before it gets too late. This helps in saving rehiring cost and loss of productivity.

One major benefit area since the start of AI adoption in the Financial sector has been frontend customer service support. From customer data and their past interactions, AI gets to know the customers and their behaviors better and this helps the company to provide customized and integrated personalized products and services with meaningful intuitive interactions that result in great customer engagement and strong relationships.

AI offers accurate interactive interfaces

Thus you will find Chatbots as a prime customer contact point in many companies’ customer service offerings. A Chatbot identifies the emotions and context of a chat discussion and provides an accurate response. This saves a lot of time and money for companies and enhances their operational efficiency.  AI can help in streamlining day to day operations. AI Cognitive technologies offer real-time optimal solutions to customers with the use of accessible data and by using a knowledge database of these cognitive systems, AI can help companies to make smart decisions to optimize their day to day working. AI is powering automation of processes at the robotic level. AI is increasingly adopting Robotic Process Automation or RPA to conduct reviews of processes and introduce enhancements. This can help the company to automate nearly 70 percent of mundane and repetitive processes. This leaves workers with sufficient time to concentrate on ways to add value in tasks that require human touch. AI also helps in reducing churn and increasing the customer base. AI can help companies easily detect customers with switching tendencies or highly disgruntled customers. AI does this by finding useful insights from unstructured data across databases and making near accurate predictions.

We conclude by saying that disruptive AI technologies can dramatically improve financial institutions and especially banks’ ability to achieve four key outcomes i.e., higher profits, at-scale personalization, distinctive omnichannel experiences, and rapid innovation cycles. Any company that does not adopt AI and integrate it to their core strategy and operations will be at risk of being overtaken by competition and deserted by their customers.