3 of the Ways AI Will Play a Vital Role in the Future of Fintech

3 of the Ways AI Will Play a Vital Role in the Future of Fintech

Once considered little more than a popular science-fiction trope, artificial intelligence is now a very real technology . Not only that, it is one that is likely to evolve rapidly in the coming years. As AI becomes more sophisticated, it’s reasonable to assume that it will grow to play a more direct role in consumers’ lives.

This is especially likely to occur in the fintech services industry. Experts who have been monitoring the fintech revolution anticipate future products and services will integrate AI, offering users a more advantageous experience.

Specifically, AI may soon play the following roles:

  1. Virtual Financial Advisor

investmentsIt’s highly unlikely that AI will completely replace professional financial consultants in our lifetimes. However, that doesn’t mean it won’t have a significant impact on how consumers receive general financial advice.

The success of services like Mint.com illustrates the fact that there is already demand for products that allow users to manage their short-term spending. Future startups will look to expand on this business model by offering users the chance to manage their long-term financial investments as well.

Eventually, companies may look to incorporate an AI software that provides users with basic insights and information about maximizing their retirement savings, assessing the value of their assets, or planning for their children’s college educations. At this point in time, AI can’t offer the subjective analysis that a human can provide. That said, if it continues to evolve at its current pace, it may not be long before AI can evaluate a person’s financial needs, providing general recommendations that a human financial advisor could then elaborate on.

Such a product will have an undeniable effect on the overall world economy. As more people gain access to virtual financial consulting, they’re going to adjust their saving and spending habits accordingly.

  1. Artificial Intelligence and Choosing Stocks

Anyone with experience investing in the stock market knows that picking successful stocks is challenging. Even if you take the time to thoroughly research a company and evaluate its potential for growth, you can’t predict the future. Unexpected events can easily drive down the price of an otherwise promising stock.

That’s why it will probably be a very long time before anyone develops an AI that can identify smart investments with complete accuracy. No human will ever be able to, either. There are simply too many variables to account for.

Instead, AI may eventually serve as something of a research assistant. Imagine a stock market investment app that allows users to learn about a company’s history, monitor its growth, compile relevant information from any publicly-released shareholder documents, and gather other useful data needed to determine whether it’s worth buying stock in a company.

Right now, you either need to do that research on your own or hire someone else to do it for you. A fintech product with a built-in AI devoted to research help could change that. Granted, this type of development may be a long way off – stock market investing apps like Robinhood are still a fairly niche market – but it could someday change the way that people choose which stocks to buy and which stocks to sell.

  1. Tracking Spending Behavior

spendingWhether you’re investing in the stock market or managing your day-to-day finances, there is one major drawback to consulting with human advisors that AI doesn’t suffer from: a human can’t constantly monitor your spending in real-time.

Fintech specialists often point out that cash could one day be a minor (or even non-existent) form of payment, as mobile and wearable technology offers consumers the ability to perform more and more of their transactions virtually. As this trend continues, they expect AI to play a more substantial role. An AI program could track not only your major investments, but also your daily spending, providing you with advice about where you could be saving more, where you’re perhaps paying too much for a service that could be more affordable, etc.

This is perhaps the best reason for fintech startups to look into cutting-edge AI when developing products. Although a human financial advisor will always be useful, you’ll manage your money far more effectively if you supplement with an AI advisor that can track all your expenses. Additionally, with AI supplementing their services, human financial advisors would be able to expand their client base significantly. And because just about everyone in the world cares about saving money, it’s easy to see why this type of service would be incredibly popular.

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