How AI is becoming an asset to the finance industry
While many people are aware of the term artificial intelligence (AI), this is largely in relation to the more extreme use-cases of AI such as flying cars and Sophia the AI robot.
Yet, much of our contact of AI – and our understanding of it – revolves around products that affect our everyday lives as consumers.
An example of this is within the finance industry. Many key players are leveraging the power of AI to improve their services. Here are three ways AI is disrupting the finance industry:
Customer service chatbots
The use of chatbots – a computer program which uses speech recognition or text-based interfaces to simulate human conversation – is becoming a popular use case of AI in Finance customer service.
Many businesses are harnessing the power of chatbots to provide customers with 24/7 financial information.
HSBC has developed “Amy”, a customer service virtual assistant chatbot which provides support to customers’ inquiries in English, as well as traditional and simplified Chinese.
American Express has leveraged AI in its “Amex bot for Facebook Messenger” service which enables some consumers to get information instantly regarding queries about account and card information.
The rise of the robo-advisor
Traditionally, the giving of financial advice has been a process revolved around a personal relationship between a client and their financial consultant.
However, we are now seeing the rise of the “robo-advisor”, which are systems that provide automated, algorithm-driven financial planning services- with little, if any, human interaction.
Robo-advisors are a method to automate the asset allocation of investments via a computer algorithm.
When robo-advisors were initially introduced to the finance industry, they were viewed as a cheap way to attract individuals who could not yet afford to individual personal finance management.
But now, an increasing number of consumers are becoming more comfortable with interacting with computer systems to address their needs.
According to CNBC, the robo-advice market is rapidly evolving and is projected to grow to US$7 trillion by 2025.
Key players in the robo-advisor market include Wealthsimple, Wealthfront, and Betterment.
With the growing abundance of data and the move to cloud computing, cybersecurity is becoming increasingly challenging for financial organizations.
Scandals such as the WannaCry and NHS data breach highlight the need for businesses to boost their data security efforts.
But as data breaches become more prevalent and vulnerabilities increase, AI systems that learn from experience and thus become more secure over time, are becoming increasingly appealing to businesses.
Many fraud detection solutions are already beginning to see the benefits of AI. Lloyds Banking Group is just one example of a financial giant leveraging AI to combat online fraud.
Gill Wylie, Chief Operating Officer at the company’s group transformation group said:
“We use models that can detect when the person logged in to our online banking is not the customer, but rather a fraudster, or even a bot. This helps us stop the fraudsters in their tracks.”
Furthermore, companies such as Digital Reasoning have developed algorithms to scan internal emails to help mitigate the risk of fraud.
Through the analyzes of various data points, machine learning algorithms can detect fraudulent transactions that may go unnoticed by human analysts.
In the company’s recent round of funding, US$30 million was raised from investors such as Barclays, Goldman Sachs, and Square Capital.