How AI Is Revolutionizing Fintech

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    Artificial intelligence (AI) promises to be a transformative technology in many industries, and it’s also disrupting fintech. In fact, 90% of global fintech companies are already relying on the power of machine learning and AI.

    Fintech has always embraced new technology and change and has seemingly welcomed AI with open arms. AI in fintech has helped transform the financial landscape into what it is today in terms of improving efficiencies, providing better customer support, and making more accurate predictions. 

    But how exactly is AI changing fintech, and is it for the better? Learn more below on why AI and fintech work well together and what changes you can expect. 

    What Is Artificial Intelligence (AI)? 

    AI has become increasingly popular in the past few years. AI might seem like a complicated idea, but there are many more instances of it you probably don’t even realize. 

    Even though the term AI has been around since the 1950s, we now use it to mean a computer or machine application simulating human thoughts or behaviors. For example, people can use ChatGPT, an AI-based software program, to create textual content that reads as if a human wrote it. 

    But the applications of AI are many, which is why using it in the fintech space has become so popular.

    What Is Fintech?

    Financial technology, also known as fintech, is the use of technology in the financial industry to help streamline, enhance, or digitize traditional financial services. Fintech can also describe any business that provides financial assistance using new technology and software, including AI and machine learning. 

    Even though the term fintech was first found in the Merriam-Webster dictionary in 2018, it’s been around for even longer. For example, one of the first revolutionizing concepts of fintech was in the 1860s when banks started implementing signature-verifying practices. 

    Since then, fintech evolved from being a way to manage payments and transactions to now including things like: 

    • Mobile wallets
    • Peer-to-peer (P2P) lending
    • Cryptocurrency transactions
    • Online personal financial management
    • Chatbots that offer financial planning 
    • Online banking

    Businesses are relying more on fintech now to manage payments, do accounting, or process transactions. While fintech has revolutionized the finance industry, AI is beginning to make waves. 

    How Is AI Used in Fintech?

    Since the fintech industry is dedicated to innovation and new ideas, it makes sense why fintech firms would adopt AI so quickly. AI stands to benefit any type of business, and financial technology and financial services are no different. 

    AI in fintech revolutionizes businesses and helps companies elevate their financial services, such as providing better customer service, more efficient software, and more easily accessible data. 

    Below are some ways fintech and AI work together.

    Ability to Make Predictions 

    One of the biggest strengths of AI is that the algorithms can recognize patterns and use them in a predictive fashion. This capability is valuable to financial organizations whose success depends on accurately forecasting trends. 

    Traditional financial predictions are a great start, but AI-driven models stand to become even more powerful and reliable. The algorithms heavily rely on recognizing patterns and analyzing historical data trends. Using these, it can make more accurate predictions within the context of financial markets. 

    With this information, investment firms can make better decisions regarding investing and portfolio management. To learn more about investment management software, check out our Architect AI technology.

    A More Customized Customer Experience

    You may have recently visited a website with a chatbot that offered to help you find the right product or service. This is a common example of AI, and personalized customer experiences are beneficial in the fintech space. 

    Customers want to feel like a product or service is tailored just for them. Financial companies can utilize fintech and AI to deliver a personalized customer experience without requiring employees to spend as much time catering to each customer profile. For example, a customer could chat with a virtual assistant for personalized financial advice based on their individual situation. 

    Automated Tasks

    Another one of AI’s strengths is automating and handling tedious tasks an employee might spend hours doing. The algorithms can recognize these patterns and automate security compliance checks, auditing, admin work, or even data entry. 

    Automating these tasks saves time, making processes more accurate by reducing human error. This can help financial firms run smoother and improve the bottom line.

    For example, INDATA’s back office managed services, which are enhanced with AI tools can help investment firms reduce costs, improve transparency, and promote operational efficiency. With these managed services, companies can incorporate industry best practices for back-office investment management with greater oversight and transparency 

    Enhanced Compliance

    Fintech is subject to all kinds of regulatory rules, and companies must ensure they’re operating in compliance, or they can be subject to fines. 

    AI-powered solutions can help monitor all of your company’s investment activities and watch for any activity that isn’t compliant,  alerting compliance to address an issue if the company unknowingly commits violations. 

    The Future of AI in Fintech

    Regardless of economic conditions, fintech remains a dominant force in the financial industry, and tools like AI will only strengthen it. While there are some challenges and things to consider when using AI in fintech, overall, there are many benefits, and it’s already revolutionized how consumers utilize financial services. 

    AI stands to allow financial companies to manage and analyze data better, improve customer service, and provide better results and advice. 

    But AI and fintech aren’t done evolving yet. AI will be a fundamental part of fintech in the coming years, and its opportunities to continue changing and growing are infinite. 

    One thing’s for sure: AI will be a significant force for businesses in the coming years. To ensure you can harness the power of AI in fintech, you need to find a robust solution that meets the needs of your business. If you don’t, your business risks losing its competitive advantage. 

    INDATA’s Tech platform integrates AI with streamlined, user-friendly functionality. With decades of industry experience, we have a wide range of clients, including global wealth management firms, pension funds, hedge funds, registered investment advisors, and asset managers. Schedule a demo today to start utilizing practical AI technology at your own firm.