Just as many other technological advancements, AI or artificial intelligence came into existence and evolved a multitude of industries. The technology has now become an integral part of the most demanding and progressive sectors.
Forward-thinking businesses and technology enthusiasts are actively exploring new potential ways to leverage technology and its advanced tools to gain a competitive edge in the market.
The rise of AI in the financial industry proves how quickly technology is changing the business landscape. The role of technology in the Fintech sector is becoming more apparent and significant every single day. As banks and other financial institutions are striving to build muscles in security, automation, analysis, and overall operations, artificial intelligence is becoming the choice.
If we look at AI, the impact of technology in the Fintech industry has been substantial in recent years. With the help of artificial intelligence, Fintech firms and lending institutions have been able to process millions of bytes of user financial data and instantly making viable lending decisions. New-age lending firms have been able to accurately assess borrower’s creditworthiness, scale-up their efficiency of delivering credit-related decisions.
AI has proven to be a game changer for multiple industries, let us look at some of the popular examples of AI in Fintech.
AI and credit decisions
Credit-based decisions have always been a challenge for lending firms as they have to rely on third-parties resulting in a longer and more expensive process. Artificial intelligence provides a faster, advanced, and a more accurate assessment of the financials of a borrower. Credit scoring powered by AI proves to be more cost efficient for lending firms and accounts for a wider variety of factors with rule-based decisions.
Banks and lending firms use AI to process a wide range of available user data to evaluate loan eligibility and financial patterns. It helps lenders to distinguish between high default risk applicants and those who are creditworthy but lack a good credit score.
AI and fraud prevention
For a number of years, AI has been playing a major role in combatting financial frauds in this exponentially growing e-commerce world. AI-driven fraud detection systems analyze the buyer’s behavior, mode of payments, and location so to find anomalies in the spending pattern and trigger a security mechanism when such things are identified.
Banks also employ AI systems to reveal transactional patterns of the users to fight another notorious financial crime, i.e. money laundering. With the help of AI, officials identify suspicious activities by recognizing patterns, for example, a big amount transferred in a foreign bank account, and investigate money laundering schemes.
Adoption of AI in anti-money laundering has resulted in a significant reduction in the efforts of identifying such unlawful schemes. Plus, it has also enhanced the rate of success in finding such felonies.
AI and risk management
AI has proven to be a powerful tool in analyzing real-time activities in any given market, identifying patterns, and providing accurate predictions and forecasts. With massive processing power, AI allows banks and lending firms to process enormous financial data in a matter of seconds, which would take far too much time if done by humans. Moreover, the analysis might then become vulnerable to errors and bias.
On the other hand, AI algorithms can quickly analyze the history of risk cases and identify early signs of potential issues that might occur in the future. This could also allow consumers to closely monitor the market and identify more fruitful investments in order to gain better ROI.
Lending platform leveraging AI
Exploring and adopting innovation in the lending sector has become a trend amongst lending platforms. Businesses are constantly looking for solutions that can leverage AI and other technologies and convert their traditional processes into fast, automated, and data-driven services. Akeo Lending could help banks and lending businesses to adopt the latest technologies and build lending solutions in a fraction of time.
In all, adopting digital technologies could significantly cut down the cost, enhance business efficiencies of such lending platforms, making lending a sublime experience for the customers. However, it would be interesting to how businesses will eliminate challenges that might hinder them from innovating and sustaining in this fast-paced market.