Artificial intelligence is one of the most promising technologies today for businesses across all industries. Since AI is ideal for number-heavy processes, it’s only natural to apply it to number-heavy applications. As a result, the potential for artificial intelligence in finance is greater than in many other sectors.
The financial sector is aware of AI’s potential and is already capitalizing on it. One survey found that 75% of large banks are already implementing artificial intelligence in their operations. As this technology advances, this adoption rate will only trend upward.
You could go on about the potential for AI in finances for quite some time. Here’s a more concise look at three of the most prominent areas banks are applying AI in today.
Fraud prevention is a significant concern for financial institutions of any size. Banks and other money handlers have a responsibility to ensure that customers’ funds only go where they want them. That can be tricky with electronic finances, which is where AI comes in.
AI systems are excellent at detecting patterns, so they can get an accurate understanding of a customer by their purchase history. If a transaction doesn’t fit in these patterns, AI can then flag it as potential fraud. The bank can then freeze the card or account and look into it before it gets out of hand.
This knack for finding patterns can also help crack down on money laundering. When AI detects suspicious activity, it can alert authorities, reducing the time it takes to investigate. Since the U.S. spends $23.5 billion a year on anti-money laundering compliance, these savings are a welcome change.
Artificial intelligence can also help finance businesses make informed decisions about loans. Traditional credit scores aren’t always an accurate representation of someone’s creditworthiness, and human bias can affect these choices. Using AI to define creditworthiness solves both of these problems.
AI can consider more factors than just an applicant’s credit history. It can also look at cases with people in similar situations, smartphone data and more. With so much more data, these systems can form a more accurate picture of someone’s creditworthiness.
When humans are in charge of credit decisions, biases could come into play. Someone could decide not to give an applicant alone based on intrinsic prejudices or a faulty impression. AI could avoid this issue, leading to fairer treatment of loan applicants.
One of the most promising applications of artificial intelligence in finance is in customer service. Many institutions don’t have the resources to help all of their customers as quickly as they’d like. With AI, limited staff availability isn’t an issue.
According to one survey, over 50% of consumers expect businesses to be available 24/7. Since automated systems don’t need to sleep and don’t get tired, they can respond to consumer questions at any time. AI chatbots can also talk to any number of customers at once, so support lines will never get backed up.
The more AI talks to people, the better it gets at understanding and responding to them. AI can even keep track of everyone’s questions to form profiles for each customer, enabling personalized banking. The system could then tailor the customer support experience to each user.
Artificial Intelligence in Finance Could Be Revolutionary
These three examples only scratch the surface of what AI can do in the world of finance. As AI becomes more advanced, new applications for it emerge. Before long, these systems will likely become standard throughout the industry.
Finance, in general, is becoming more tech-centered, with digital services replacing more traditional models. In this digital world, financial institutions need digital solutions, increasing AI’s utility. It’s safe to say that the finance sector won’t be the same after AI.
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