Artificial intelligence (AI) and machine learning in finance encompass everything from chatbot assistants to fraud perception and task automation. Most banks (80%) are highly appreciative of the potential benefits presented by Artificial Intelligence, according to Insider Intelligence’s AI in Banking report.
The decision for financial institutions (FIs) to adopt Artificial Intelligence will be accelerated by technological improvement, the increased user receives, and shifting regulatory frameworks. Banks using AI can streamline tedious processes and vastly better the customer experience by offering a 24/7 approach to their accounts and financial advisory services.
Applications of AI in Financial Services
With key business benefits and pressure from tech consumers top of mind, AI algorithms are being implemented by FIs across every AI financial service– here’s how:
AI in Personal Finance
Consumers are hungry for financial independence and providing the to manage one’s financial health is the driving force after the assumption of AI in personal finance. Whether offering 24/7 financial guidance via chatbots powered by natural language processing or personalizing intuition for wealth management solutions, AI is a necessity for any financial institution looking to be a top player in the industry.
A quick example of AI in personal finance is capital one’s Eno. Eno launched in 2017 and was the first natural language SMS text-based subordinate offered by a US bank. Eno generates insights and expects customer needs through over 12 proactive capabilities, such as alerting customers about suspected fraud or price hikes in subscription services.
AI in Consumer Finance
One of the most significant business cases for AI in finance is its capability to prevent fraud and cyberattacks. Consumers look for banks and other financial services that provide secure accounts, mainly with online payment fraud losses expected to jump to $48 billion per year by 2023, according to insider Intelligence.AI has the capability to analyze and single-out irregularities in patterns that would otherwise go unnoticed by humans.
AI in Corporate Finance
AI is particularly helpful ai in corporate finance as it can better anticipate and assess loan risks. For companies looking to increase their value, AI technologies such as machine learning can also lessen financial crime through advanced fraud detection and spot abnormal activity as company accountants, analysts, treasurers, and investors work toward a long-term extension.
Benefits of AI in Finance
The benefits of executing AI in finance-for task automation, fraud detection, and delivering personalized recommendations-are monumental. AI use cases in the front and middle office can transform the finance industry by:
- Enabling frictionless,24/7 customer interactions
- Reducing the need for repetitive work
- Lowering false positives and human error
- Saving money
Automating middle-office tasks with AI has the possibility to save North American banks $70 billion by 2025. Further, the collection potential cost savings for banks from AI applications are approximate $447 billion by 2023, with the front and middle office accounting for $416 billion of that total.
Fintech: Future of AI in Financial Services
Between growing consumer demand for digital offerings, and the threat of tech-savvy startups, FIs are rapidly embracing digital services by 2021, and global banks’ IT budgets will surge to $297 billion.
With millennials and Gen Zers quickly becoming the bank’s largest addressable consumer group in the US, FIs are being pushed to increase their IT and AI allocation to meet higher digital standards. These younger consumers prefer digital banking channels, with a massive 78% of millennials never going to a branch if they can help it. And while the migration from traditional banking channels to online and mobile banking was underway pre-pandemic due to the growing chance among digitally native consumers, the coronavirus dramatically increase the move as stay-at-home orders were executed across the country and consumers sought more self-service options. Insider Intelligence estimates both online and mobile banking assumptions among US consumers will rise by 2024, reaching 72.8% and 58.1%, respectively-making AI implementation critical for FIs looking to be successful and aggressive in the evolving industry.