Be it a small size firm or a large scale organisation, Artificial Intelligence has taken the world by storm. And the finance industry is nothing exceptional, which is what this blog is explaining here.
Artificial Intelligence is the newest concept of this digital era that has taken the entire world by storm due to its diverse applications. Industries of all sizes and shapes are incorporating this wonderful technology to increase their productivity and to enhance their business, and Finance world is no exception. In fact, the popularity of AI in this sector is gaining popularity at an exponential rate and will be going to be a major role in the coming years.
Nowadays, every organisation and various other companies in the Finance Industry have started to use the technology of Artificial Intelligence. Whether it’s helping businesses to reach their audience effectively and precisely or making it easier and providing a safer platform for the audience to perform transactions, AI is present everywhere. In this blog, we have outlined 5 different applications of AI in the finance industry. So, let us get started.
Artificial Intelligence and its role in the Finance Industry
- Assessment made easy
As we all know that the basic function of AI is to analyse the data of past events and provide a unique solution for the present. It’s quite natural that AI should succeed in the realm of finance, where things like bookkeeping and records are integral parts of the business. In order to understand its application, let us take the example. Any lenders, banks and other financial institutions check the credit score of the person as the biggest factor to decide whether he is eligible for the loan or not.
However, this is not something all lenders entirely rely upon and they go for other factors such as person repayment habits, the total number of loans active, number credit cards on usage, etc. Based on all the information, the lenders decide what kind of loan should be given to the borrower whether it is going to be very bad credit loan, no guarantor loan or no broker loan. Well, going through all these numerous data for hundreds of borrower can be really difficult for a person. This is where AI comes in. As it solely works on data available so going through the records allow AI to make a recommendation of loan and credit products which make sense historically.
- Fraud detection and management
Today, every business focuses on eliminating the threats circulating around it. This is even in the case of a financial institution which is prone to various fraudulent activities. The loan that a bank lends to any borrower is actually someone else’s money, and this is the reason why we receive interest on deposit and dividends on investments. Thus, banks and other financial institutions give priority to security to make sure that their business stays free of any fraud activities. AI helps in mounting a strong wall of defence that protects these institutions from any kind of fraud attacks. Basically, it analyses the past spending patterns of a person and alert if there is anything suspicious such as using a card from two different locations in just a few minutes or hours, or an attempt to withdraw a large amount of money that is not normal by seeing the person past transaction behaviour. Another brilliant feature of AI is that it has no limitations to learning. If it alerts for any unusual transaction and is corrected by a human, then it adapts itself through the experiences and can perform even better and more sophisticated decisions.
- Better finance management
In this busy day of our life that revolves around in paying rents and bills, financial management seems to be just a fancy word. However, AI is somehow helping to make it possible and is contributing a lot in the sector of personal financial management. Nowadays, AI-based wallets are available in the market allowing the users to make better decisions on financial matters. What it does is that the AI used in such digital wallets gathers all the useful data and provides a graph that reflects all your spending and transactions. This can be extremely beneficial for those who have just lost their job and are managing their daily expenses by the money which they got by applying for loans for unemployed. This way the person can keep an eye on all their spending and will know how much exactly he needs to save money in his pocket to survive until he finds a new job.
Wrapping up, by seeing all the mentioned points, it would not be wrong to say that AI is the future of finance and it will be playing a greater role in the coming years. Even chances are there that it will replace humans to provide better and more efficient solutions. There are various organisations that see this cutting edge technology as the long term investment and spending huge money for its implementation.