The financial services sector is evolving rapidly to provide improved services to its clientele. Some of the key factors that they are now focusing on include real-time information processing and decision making, customer-centric services, exceptional security measures and reducing costs for AML compliance. Such approaches have also contributed to the goal setting for the fintech sector. They are now focusing on building innovative solutions that can help banks and financial institutions achieve their goals. One of the major technologies that have played a pivotal role in the transformation of the Fintech industry is AI or artificial intelligence.
Previously availing services from banks or Non-Banking Financial Companies (NBFCs) was a long and complex procedure for people. Thanks to AI Fintechs are now able to develop systems and solutions that are more inclusive and provide personalized services to the public. From providing financial management advice to procuring loans to optimizing the onboarding process for clients, AI has provided a vast array of solutions for financial service companies. One of the major advantages AI has for them is the ability to cut down the operational costs of a process.
The financial services sector has been highly regulated since its inception. This is mainly due to the fact that the bulk of financial transactions and dealings tend to be complex and involve a huge risk of fraud and crimes like money laundering. Over the past few years, financial regulators like FATF have made these regulations more stringent as a lot of money laundering scandals were found to have been linked with terrorist financing.
The increasing regulations along with the fact that customers are coming to expect their services to be more efficient and customized has prompted banks and NBFCs to implement modern technologies to meet their challenges. AI, in particular, has come in extremely handy in such circumstances. It is able to use large amounts of existing customer data regarding their income, spending patterns and purchase behavior to analyze and recommend them the services that are best suited to their needs.
By using machine learning algorithms, banks can sift through large amounts of customer transaction and detect suspicious activity within seconds. It also allows them to manage the risk profiles of clients through AML (anti-money laundering) screening and anomaly detection. Through such advanced systems, banks are now able to establish the perfect AML compliance process in their frameworks, thereby optimizing onboarding procedures as well.
AI technology has helped Fintechs develop better systems that are easier to integrate for banks and NBFCs. They have been able to develop solutions that can provide deeper insights into a customer’s behavior and what appeals best to them. It, therefore, makes it easier for financial companies to decide what product or service to pitch to each client. Automated chatbots that run on AI are able to handle thousands of customer queries within minutes, thereby reducing the time and cost for customer service operations. Banks are now able to disburse loans on the same day as the process for applying for credit has become remarkably simpler. AI has lent speed and accuracy to functions in the financial sector. Fintechs have been effectively able to develop systems that cater to customer needs and are, most importantly, user-friendly and efficient.