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AI in the Fintech industry is not a new term for any tech-savvy or general readers who understand the technology prospects of any system.
It’s the core reason behind the fast-forward transformation of the banking industry in the last two decades.
Whatever you are experiencing in the financial domain, be it digital (UPI) or contactless payment, Trading, or investing, Artificial Intelligence, aka AI, has a massive role in making it more efficient and reliable.
Anyway, after all this, the role of AI in the Fintech Industry often comes under the expert radar. You will always find debates and discussions on this topic in technical conferences, webinars, and workshops.
We often wonder whether it is because of the rapid transformation that took place in the banking industry under Artificial Intelligence. Or it’s only a fundamental concern about the future of AI in the Fintech Industry!
Let’s analyze both to understand “AI in Fintech” from the inside out!
Role of AI in the Fintech Industry
Artificial Intelligence (AI) and Machine Learning (ML) have changed the Point of View of many experts and tech enthusiasts with their flagship offerings.
It has made them look for more personalized approaches to a problem, irrespective of the complexities. AI and ML comprise robust and advanced algorithms.
It can quickly adapt to changes and catch user behaviors to help organizations prepare or change their strategy.
In the financial industry, these prospects are helpful for onboarding new customers, retaining old ones, and catching fraudsters in the banking ecosystem.
Moreover, security measures and two-factor authentication were two bigger concerns for the financial sector in the past. With no solid security system, many used to face huge losses.
However, with the inclusion of AI, users are making seamless transactions with a few taps on their smartphone screen without worrying about malfunctions.
Customer service has also improved. Now, users don’t have to visit the bank to resolve the issue physically. They are getting solutions through live chat or direct assistance via chatbots.
Note – AI in the Fintech market is expected to grow to $31.71 billion in 2027 at a CAGR of 28.6%.
These are only a handful of examples that define the role of AI in the fintech industry. There are more, and this process will continue with each technological advancement.
To your concern, let’s look at a few more reasons to choose Artificial Intelligence for the Fintech industry.
Why choose Artificial Intelligence for the Fintech Industry – Top Reasons Explained!
Below are some primary reasons that make Artificial Intelligence the perfect technical choice for the fintech industry.
These factors have immensely helped the sector grow in the last two decades.
With AI and ML, Fintech companies no longer use or suggest the manual plan and profile setup.
All their financial and investment plans are now personalized per their target audience and region suitability.
Plus, the omnichannel support AI brings has given them the required platform and recommendations to enhance their growth on the global stage.
Most importantly, users can choose the payment type and channel to ensure seamless transactions without needing a third party.
- Reduce Operational Cost & Risk Management
If not 100%, then nearly 80% of work in a Fintech company is done by AI. Banks and financial companies ensure that each task and business operation must come under risk and error-free zone to maintain accuracy.
In contrast, the RPA (Robotic Process Automation) helps them maintain it within the best practice and avoid inconvenience.
- Customer Experience Enhancement
We have already talked about it. The banking sector was heavily criticized earlier due to its inefficient customer support.
The support that and back then technology could not cope with the user demand and queries.
However, Ai has brought a ray of hope with the chatbot’s inclusion. Also, social media and automated email responses have helped them respond quickly and accurately in time.
- Automated Investment Process
In the era of AI and ML, the manual way of consultation sounds old-fashioned. It’s still relevant and essential, though.
But, for a quick change in technology and to ensure quick and accurate suggestions, many fintech companies have started implementing robotic advisors into their banking mechanisms. Robo-advisors are expected to manage $2.8 trillion in assets by 2023.
- Accurate Decision-Making & Results
Humans and mistakes are two sides of a coin. We are bound by mistakes, even if we try hard to avoid them under any circumstances.
In the banking sector, a tiny error could lead to a massive breakdown in the machines and investment policies.
AI, on the other hand, has brought the zero-error and accurate solutions and results assurance.
Also, it has helped Fintech organizations save ample time, cost, and effort in a broad way.
Challenges Faced by Fintech Companies during AI adoption
When there is an opportunity to scale growth, one must prepare for the challenges it brings along with it.
Every coin comprises two sides. If being a Fintech owner, you are ready to avail the brighter side of Artificial Intelligence in your mechanism. You must prepare for unwanted and essential challenges leading to a brighter path.
Here are some common challenges that Fintech companies often encounter regarding Artificial Intelligence:
- Higher Budget
If you aim for high-end scalability and security measures, you must pay a considerable price. AI is costly, no doubt about it. But, despite being higher on budget, we have seen rapid adoption of it amongst the Fintech owners worldwide.
Fact checks – 86% of the banks and insurance companies are determined to increase their AI-related fund to better their service by 2025.
However, newcomers and low-on-the-budget organizations might wait a few more years to use this technology. Or they could simply opt for an AI investment policy to scale up the Process.
- Mediocre Resources
Artificial Intelligence or AI is an advanced technology. The algorithm keeps upgrading with each technical inclusion.
Hence, hiring AI professionals with in-detail proficiency and bringing your vision to reality within your decided timeframe takes a lot of work.
We suggest you run extensive R&D and competitor analysis before finalizing anyone or partnering with any organization for your Fintech solution.
- AI has yet to be entirely accepted
Irrespective of the convenience and transparency, it will take more than a few decades for people to trust machines instead humans fully.
People still like dealing with people and prefer face-to-face interaction rather than chatbots. So, convincing them to trust the robots will be daunting, especially in small urban and rural areas. It will gradually happen.
The Future of AI in the Fintech Industry!
The banking sector is on the rise globally. Since the inclusion of AI, it has undergone a massive digital transformation.
When you compare the differences between before and after AI, you will realize how easy, secure, and compatible the banking process has become.
A decade ago, no one, except some visionaries, had a clue that UPI or digital payment would someday become the primary payment source.
Or international payment and currency exchange become seamless, with no third-party acting as an intermediary between the parties.
Now the financial sector is moving ahead with contactless payment. It means users do not need to swipe or enter OTP for shopping. All payments can be made without the involvement of smartphones and cards.
These are a few vital contributions of AI in the Fintech or banking industry. Apart from these, it has been taking care of customer support, TradingTrading, finance operations and analytics, and many more with sheer consistency and accuracy.
With all this, the future of AI in Fintech looks promising. We hope it will bring new possibilities and make the user experience with the Fintech sector more convenient with high-tech scalability and security.
AI in Fintech is a complex combination that demands professional assistance at every step. A single mistake and you might encounter a loophole in your system that could lead you to more significant trouble.
After all, being a Fintech service provider, you must ensure high-end security and compatibility with your users on every level of business operation. Hence, partner with Metizsoft Solutions now.
From consultation to app development, we help you onboard the best Fintech solution within the budget and time frame.
Manthan Bhavsar is one of the most brilliant go-to people when someone thinks to Hire Shopify Certified Experts! A techie by profession and a technologically driven person by passion, Manthan Bhavsar isn’t shy to blog and share the knowledge he has with the world. If you want to follow Manthan, you can do so on Facebook, Twitter, and LinkedIn
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