The Artificial Intelligence (AI) intervened into the financial world. The term AI includes different technologies that range from robotics to process automation. New technologies are getting applied more often in various sectors. The AI is expected to reshape the industry and bring new rivals to the financial companies – tech companies that have capacity and resources to grab a share of the market. The AI in finance relates to the Fintech which is synonymous to the digital innovation in the financial sector. The key benefit of AI is higher efficiency compared to human work. The future applications of the AI will affect different areas of the financial industry such as financial planning, consumer services and insurance. The key applications of the new technologies include the following:
- Digitalisation of financial services;
- Mobile tech integration;
- Personal finance;
- Financial planning;
- Insurance;
- Regulatory compliance.
1. Digitalisation of financial services
Improving technologies and devices make financial services more accessible to customers. It is the new and growing trend in the financial industry which financial companies must comply with to remain competitive. The digitalisation is the process of innovative application of digital technologies to financial services. The process has already contributed to the changes in the industry such as the rise of new financial services, the emergence of advanced platforms and new technologies. The digitalisation is closely related to new disruptive innovations that changed the industry such as Distributed Ledger technology (DLT), Big Data, The Internet of Things (IoT), cloud computing, AI and augmented/virtual reality. The AI can be used to improve cooperation between humans and machines which relates to machine learning that is widely used in the industry. The use of AI and machine learning helps automate and optimise operations in the financial sector. AI plays a crucial role in the digital transformation that the industry is coming through now. Furthermore, in the future, new inventions will emerge and the sector is likely to see the continued progress with use of existing technologies.
2. Mobile tech integration
Mobile technologies reshaped the financial industry. Mobile banking and mobile payment systems changed the way the customers interact with banks and financials. The AI is powering the use of mobile technologies and the effective use of the new technologies. Furthermore, the trend of mobile tech integration goes beyond the financial sector. Retail companies began to implement the mobile systems to their operations as well. AI will impact the financial industry through account transactions via mobile technologies. Mobile banking has already become the norm in the industry and it brings the array of data to financial companies to use efficiently. The AI will enable the businesses to gather more data on customers. This will help financial companies develop new services to better fit with client needs. Furthermore, AI is at the core of the mobile tech integration in the industry.
3. Personal Finance
Another area of finance that is impacted by AI is personal finance. Personal finance is expected to be reshaped by the digitalisation and the AI. The new technologies will allow companies to provide customised services that will be tailored at a certain customer. This relates to development of intelligent products that will cover the personal spending, saving and investing services. The AI will be heavily used in development of these products.
4. Financial planning and wealth management
There is no area that is more exposed to the change driven by AI than wealth management or financial planning. Smart wealth management is already operating in the financial industry. AI-driven automated systems will be responsible for financial planning using complex algorithms that are tailored to the client. The services will be personalised and the AI is fuelling the personalisation of financial planning. AI will change advisory and investment/trading by using the robo-advice platforms. Enabling the companies to make more efficient trading/investment results. The technologies are already used by some hedge funds asAI is responsible for pattern recognition and algorithm development. Furthermore, the new technologies will contribute to cost reduction and improved efficiency. AI enables the firms to reduce cost of financial services and cost of serving customers.
5. Insurance
AI will have significant implications in the insurance industry. The technology enables the firms to more efficiently provide insurance services. The impact relies on the more effective analytics tools provided by the AI that enable the insurance companies to improve underwriting and improve risk pricing. This is likely to improve the quality of insurance services and promote creation of new products that will meet more effectively the client needs.
6. Regulatory compliance
The AI technology has implications for fraud detection and regulatory compliance. The companies can use the technology to better detect fraud and make compliance more automated, cheaper and effective. AI can be applied to regulatory compliance and give financial companies a big advantage by simplifying the process, making it “smarter” or more intelligent and increasing efficiency. This will result in more effective fraud detection and lower costs. Therefore, the AI can be effectively used in regulatory compliance.
Summary
AI is expected to reshape the financial industry by improving efficiency and increasing competition in the financial sector. The tech companies are likely to enter the industry and bring more innovation to consumers. The AI will revolutionise the consumer services, financial planning and insurance industry. In addition, the new technologies will help optimise the regulatory process. It is reasonable to expect that the AI will benefit both consumers and businesses in the industry. However, the firms will have to change their strategies to cope with increased competition and revolutionary changes in the industry.
Catherine Smith is an online Marketing Manager for Original PhD, specialising in PhD thesis writing. She is passionate about researching and writing on various topics, including Education, Marketing, and Technology.
