Following COVID-19, the business sector has had to implement major changes in technology. The financial industry has seen significant growth in relation to services using technology. In this sense, FinTech is transforming the traditional structures of financial services. FinTechs can benefit from and complement themselves with the use of technological tools, such as artificial intelligence (AI), allowing them to improve their services and boost their performance. Jason Simon, a FinTech specialist, explains how this sector can benefit from the advent of AI.
FinTech presents an important variety of technologies such as financial services through software, such as online banking, mobile payment applications, mobile wallets, blockchain and even cryptocurrencies. Among them, AI is a fundamental tool to make FinTech technology and software possible.
AI is emerging with great force as a must-have technology for innovation in financial services. Today, AI has many applications. In the case of FinTechs, AI has a huge potential to achieve good performance in companies. This technological tool is capable of handling huge amounts of data, finding patterns and even generating predictions to help the company make decisions. Likewise, it also allows getting to know customers better.
“With the use of AI in the business sector, human errors are bypassed, companies have a better understanding of what their customers want and how they want to conduct their finances,” Rodriguez explains. “Also, FinTechs can analyze different business issues, engage customers and maximize their services in order to generate more profit.”
The expert assures that all this makes it possible for FinTechs to offer products suited to the company's model. Among the main areas of application of AI in financial institutions, Simon highlighted some.
First, there is fraud detection. With the use of AI, fraud or identity theft in financial services can be prevented by creating regular patterns of activity. Thus, an unknown spending pattern can be detected and, consequently, alerting and triggering alarms when these are not met.
“In terms of fraud detection, AI is employed to analyze the behavior of your customers and your employees, extracting patterns from Big Data,” assures Simon. “The application of AI helps reduce fraudulent transactions and increases real-time approval of genuine transactions.”
This technology also gives way to biometric authentication. Business digitization, new technologies applied to financial services and their struggles against cybercrime means that these biometric systems are primarily applied in the FinTech and Insurtech sectors.
This AI-based technology used as a method of authentication and recognition of fingerprints, voices or faces is increasingly widespread and secure security mechanisms. These techniques are achieved from biometric data based on their physiological characteristics and human behavior.
It is also known that humans need help with complex analysis because there are usually too many factors to consider. AI technologies can help financial institutions quickly monitor and analyze large amounts of data. Furthermore, Simon explains that “it is possible to make key correlations between different parts of the data to launch pre-programmed conclusions and draw new conclusions based on the stored data.”
One of the applications provided by AI are Chatbots. Digital agents for customer service automation that provide support for routine queries by offering personalized financial products. Another application is Robo advisors. They consist of digital platforms that provide automated financial advice, planning and management services. These are based on AI algorithms and predictive models that are made based on the investor's personal circumstances.
AI-based credit scoring is perhaps one of the most promising and relevant uses of AI in this area. AI credit scoring decisions are based on a wealth of data, such as total income, credit history, transaction analysis, and work experience, among others. The score represents a mathematical model based on statistical methods and accounts for a large amount of information.
Therefore, credit scoring using AI delivers individualized inspections based on a number of additional factors in real-time. This provides access to financing for more people with income potential.
About Jason Simon
Jason Simon is a FinTech and digital payments expert who became involved in cryptocurrencies when they were first introduced. He enthusiastically follows what is happening in the evolving world of finance, excited about the prospects digital currencies offer global consumerism. When he's not involved in helping advance the digital payments space, he enjoys spending time with his family and improving his community.
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