Fintech, as the name implies, involves using technology to offer enhanced financial services. That’s why the fintech revolution has been so dynamic in recent years. Many people focus on technology like mobile devices when discussing how fintech has been thriving. However, it’s important not to overlook the role of other technologies fueling the fintech revolution.
Artificial intelligence, or AI, is one such innovation. This tech is no longer mere science fiction. Organizations across a wide range of industries are leveraging AI to reduce operational costs and better serve their customers.
Fintech startups are no different. They (and their customers) stand to benefit in many different ways from using AI. The following are just some examples we’re likely to see in the near future.
Evaluating Investment Opportunities
When determining if a potential asset is a safe investment, whether it’s a stock or a piece of real estate, it’s necessary to analyze data and past trends. Unfortunately, human analysts are limited by the fact that they’re, well, human. Like all people, they’re prone to bias and they can only work at a limited pace.
That’s not the case with AI. Although even a sophisticated AI may still exhibit some bias (after all, humans developed the algorithms dictating the behavior of the AI), it will typically be more objective than a human worker. That means it’s more likely to make accurate judgments based on analysis of relevant data. Additionally, unlike a human, AI can analyze data 24/7, at a very rapid pace.
Some firms are already using AI to predict whether the value of an asset is likely to rise or fall. They’ve often shown remarkable accuracy. As a result, it’s likely that more companies will follow suit in the future.
Improving Customer Service
Customers want personalized service. This is true whether they’re buying a pair of shoes or opening a bank account. AI makes it easier to offer that kind of service. With AI, fintech companies can leverage customer data to offer relevant promotions, tailor their services to individual needs, and better predict what services customers expect.
Equipping chatbots with AI is another way to improve customer relations. When a customer has a question or concern, they don’t want to go through the tedious process of waiting for a company representative to address their needs. With AI chatbots, that’s less likely to happen.
Chatbots can perform a wide range of customer service tasks. Additionally, AI can be available 24/7. This allows customers to seek assistance whenever is most convenient for them. Chatbots don’t require customers to wait on hold. They can also help fintech companies save money by reducing the costs associated with maintaining a large customer service department.
Not only that, a fintech startup could theoretically develop an AI-equipped chatbot that has the branded “personality” the company wants to express. Human customer service employees can get tired or irritated. It’s difficult to ensure positive interactions with all customers when you rely on people to respond to questions and concerns. With an AI chatbot, on the other hand, a startup could ensure that all customers who reach out to the company have consistent, positive experiences.
Any major financial services company, whether it’s a young fintech startup or an established institution, must constantly take measures to detect and prevent fraud. This problem has only grown more noteworthy in recent years.
For example, while technology has facilitated easier international transactions, this means that the risk of fraud has increased for many companies. Credit card fraud is one specific form of this crime that has become more common in recent years. Online transactions make it easier to commit credit card fraud, and many times customers lose funds quickly when the crime occurs.
Fortunately, technology is capable of addressing this problem. Instead of relying on human workers to detect fraud, financial institutions have begun to shift their approach, using AI to identify fraud. AI can constantly monitor large volumes of customer data, recognizing warning signs immediately.
Additionally, AI is flexible. It learns from every piece of customer data. Thus, if a customer’s life circumstances change in such a way as to dramatically impact his or her spending habits, an AI can still accurately determine if a particular transaction is a likely sign of fraud.
Fintech companies thrive because, rather than relying on entrenched methods, they use new technologies to optimize financial services. It only makes sense that these businesses will embrace the benefits AI offers. Those that do are likely to succeed and serve their customers much more reliably.