Five Ways AI is Changing the Finance Industry
AI is just one part of the Internet of Things revolution that has steadily been taking over both professional and everyday life these past few years.
Some might still fear AI as a threat to their jobs, but the fact of the matter is that the technology has not only streamlined many industry processes, but helped the customer experience as well.
In finance, AI now plays a huge role across a number of key areas. From risk and fraud avoidance to helping customers carefully manage their personal finances, businesses are utilising the power of AI to optimise their operational performance.
AI’s importance to the world of risk assessment cannot be overestimated. Its ability to process vast amounts of data in lightning-quick time without error means financial institutions have quickly and considerably improved their risk analysis processes.
AI’s algorithms provide accurate reads on both real-time and future risk activities across all markets, making it an essential feature of any modern finance operation.
Fraud prevention & management
AIs ability to observe, learn and grow means it’s quickly catching up to even the most advanced of online fraud schemes. And with the rise of such things as credit card fraud in recent years, it’s an invaluable asset to the world of safe e-commerce.
Through the monitoring of client behaviour, buying habits, spending and location, fraud prevention systems can spot unusual or suspicious activity and quickly trigger relevant security protocols.
The same goes for money laundering, where the technology is having a major impact on the investigation process.
Credit decision making
Nowadays, everyone is obsessed with their credit score which, thanks to AI, provides a quick, clear and fair assessment of a potential borrower for lenders to make a decision from.
AI technology helps businesses decipher high-risk prospects from inexperienced ones and presents a range of data for better informed lending decisions.
Lenders can also now customise to the individual; for example, setting a personalised interest rate on a new card for a customer based on the detailed analysis the AI provides.
Like with risk assessment, AI provides actionable information on future patterns in the market useful for trading and investments.
Trading systems carry out large data processing and utilise observable patterns in a market’s history for businesses to make better investments based on more accurate forecasting.
Such is the detail that AI forecasting provides, it can also make portfolio suggestions for both high-risk and low-risk strategists alike, making it a game changer for the trading industry.
A constant theme with AI in any industry is the ability to remove the more mundane, time-consuming work from the human workforce, helping businesses save on operational costs and devote skilled resources elsewhere.
By employing AI to focus on high volume, repetitive tasks, businesses remove the prospect of human error whilst boosting staff productivity. Back in 2016, ‘Big Four’ professional services firm Ernst & Young supposed that AI had offered a 50-70% cost reduction on these sorts of tasks, with processes having been further streamlined three years on.
AI is no longer a pipedream of the future. It is, in fact, a very real part of everyday business. Finance is no different to any other major sector, and further AI advancements are only set to make the industry stronger in the years to come.