With time we adapt to technological advancement; and needless to say, Artificial Intelligence (AI) is the hot talk at the dinner table.
With its increasing popularity, Artificial Intelligence will spur the next industrial revolution.
The finance industry was one of the first to adopt AI, and according to IDC (International Data Corporation), banking will invest more than $5 billion in 2020 on AI systems. A major chunk of which will go towards automating threat intelligence and prevention systems as well as fraud analysis and investigation.
Banking and financial services are utilizing AI to gain a competitive advantage in the market. AI systems are helping institutions support customers and organizations with better recommendations, risk analysis and smarter decision making.
The sheer volume of data and information, increased customer interaction and need for personalised, quality service has led the financial industry to adopt Artificial Intelligence to help meet the growing market demand. From chatbots to tracking financial transactions, AI has become essential.
Let’s have a look at some of the AI technologies that are revolutionizing the finance industry.
Let’s start with the common chatbots. With the increase in customer interaction, queries, and processes, AI-powered chatbots have been introduced in financial institutions. This conversational banking is helping both the users and institutions in many ways, such as by providing them 24/7 access to customer support.
The AI-powered chatbots are acting as assistants to the customers and are solving their problems and queries instantly by replicating the patterns of human conversations.
For example– HDFC Bank’s EVA (Electronic Virtual Assistant). It is an AI-powered banking assistant developed with the focus of providing better and faster service to HDFC’s customers. Utilizing Natural Language Processing (NLP), EVA understands user queries and fetches the requested information from thousands of possible sources in milliseconds.
Another example is Ceba by Commonwealth Bank Australia. This Virtual Banking Assistant provides real-time customer support solutions to the customers. Ceba has the potential to help customers with around 200 banking tasks such as checking account balance, making payments, activating cards, and many such.
#2 Risk Assessment
Moving on from the AI-enabled chatbots and voice assistants now, let’s know how AI is helping in risk assessment. Before AI’s interruption in the financial sector, risks were determined based on spreadsheet data, which was time taking, prone to error, and inefficient.
But with the introduction of AI, that uses Natural Language Processing to mine unstructured data, detect pattern and flag outliers; it is easy to come up with a solution or even make a recommendation of loan or credit offerings.
AI is data-driven and apart from credit scoring and lending and scanning records, AI also influences the way banks assess and manage risks.
Banks like Citibank partnered with Feedzai- a data science company to manage risks by monitoring transactions or watch for suspicious payment behavior shifts among the customers, all powered with AI.
#3 Fraud Management
Financial transactions need tight security. Here come two different responsibilities of the bank. One is to provide a simple transaction to the customers through various channels and the other responsibility is to prevent fraud or come up with robust security solutions for fraud detection.
The old school method of determining fraud included the cumbersome statistical process of analyzing data. With the new age of AI the method of managing and detecting data has changed completely.
AI-powered programs study the past spending behaviours on transactions, email subject line, geo-location data, etc. to find any odd activities. Such behavioural trait study is useful to not only detect a fraudulent transaction but also to give an indication that maybe the account is compromised.
AI can also detect the behaviour pattern if one suddenly begins making purchases in a different state, then the account holder may get flagged for fraud prevention, requiring him/her to call bank to personally verify any purchase.
Online trading has picked up the pace and has become mainstream in the market across the globe. With the AI ability to analyze big data, it can predict future patterns and also observe patterns from the past data and tell how the model might be in the future.
AI-driven algorithms reduce errors, detect and analyze any change in the market pattern, to counteract market manipulation and prevent from the wrong investment call.
AI techniques like deep learning and machine learning are used to monitor high-frequency trade and flag any suspicious transactions.
For example, Trading Technologies, a company based in Chicago, has an AI platform that recognizes complex trading patterns on a vast scale across multiple markets in real-time. Using machine learning technology with data processing, the company provides its clients with the assessment of compliance risk.
Artificial Intelligence has transformed and streamlined the trading process by preventing clients from fraud.
Audit and Compliance
Innovation is enabling auditors to deliver clear insights without wasting any time. The use of artificial intelligence in auditing and compliance is of great help to address complicated problems like fraud, money laundering, regulatory compliance, foreign regulations, insider trading, etc.
The part of AI technique- machine learning is used for auditing. Here the machine has built-in algorithms that learn the pattern based on past transactions and processes.
For example, making use of AI, auditors can analyze complete data sets. If advanced tools are used, then they can be applied on all the company’s contracts, which is related to audit interest or to metadata. This can help to reduce audit risk by making it less likely for an unusual transaction to slip through the cracks.
AI is the future of technology that is sure going to bring improvements and revolution in different industries. Organizations from different industries and sectors are using AI to speed up their processes and increase security.
As AI and machine learning algorithms become more advanced, huge investments are on the way for AI, as it proves to be the cost-cutting and time-saving work tool that helps the organization to avoid human errors.
Currently, AI is in its nascent stage. Still, undoubtedly it will soon sweep the finance industry by the awe with its 24/7 customer comforting assistance, fraud detection, risk management features, among many other developing and new techniques.