According to a survey of 80 FinTech businesses conducted by Tribe Payments, 67% of respondents believe that artificial intelligence (AI) and machine learning (ML) will have the biggest impact within their industry in the near future.
The use of such technologies in FinTech products have already reached an estimated value of US$6.67 billion in 2019, and with customer demand for personalised services delivered on-demand set to grow in the next five years, is projected to grow to over US$22.6 billion.
That’s because AI can serve to optimise processes for financial institutions like yours in multiple use cases, such as strengthening fraud prevention measures, delivery of customer experiences, and improving the efficiency and convenience of online payment services.
It therefore pays to keep abreast of emergent trends when it comes to AI in FinTech, no matter what kind of service your business offers in the industry.
Here are five of the AI-related trends in the FinTech industry that you might want to keep an eye on.
1. Credit Scoring Of Prospective Borrowers
If you're managing a financial institution which offer loans to customers, you're probably using credit scores from credit bureaus such as Credit Bureau (Singapore) and Experian Credit Bureau Singapore (ECBS) to gauge how credit-worthy your would-be customers are.
However, while your financial institution is likely collecting a vast amount of customer data, it may not be able to spare the time and effort needed to analysing that data to gain meaningful insights.
That’s where AI and ML can come in especially useful, as solutions powered by these technologies are very effective at processing large amounts of data to provide conclusions or recommended actions.
FinTech firms which provide such alternative credit scoring solutions, such as CredoLab, can help such financial institutions analyse all the data collected from their customers.
This allows them to profile customer risk much more accurately by taking various details into account, instead of relying on credit scores which are calculated merely from customers’ credit histories.
Because of this, local financial institutions like yours are employing these AI tools to such an extent, the Monetary Authority of Singapore (MAS) has tasked local industry players to establish an AI framework for ‘fairness’ credit scoring metrics.
2. Fraud Prevention In Digital Banking
In 2019 alone, identity fraud and account hacks have cost financial institutions up to US$16.9 million, due to the difficulty of verifying and authenticating customers in digital banking channels adequately.
Because of this, financial services firms like yours have had to stay up-to-date on the latest security techniques.
AI has also proven instrumental in this regard, as AI-powered advanced risk analytics and fraud detection technologies are capable of reacting to incoming data, find patterns and relationships within this data, and recognise fraudulent activity in real time.
A growing number of financial institutions have thus resorted to such AI-powered solutions from FinTech firms in order to identify suspicious activity and combat these threats.
3. AI-Powered Payment Processing
Although AI has been gaining a strong foothold into the financial services industry in general, the use of the technology in payment processing has only become an emerging trend in FinTech as of 2020.
The integration of AI into financial systems enables optimisation of payment processes in several ways. These include AI algorithms that provide a human-like customer experience, and the use of biometrics for user authentication amongst others.
The growing use of AI in payments also helps financial services firms like yourself collect information about customer behaviours, and analysing that data in real-time to identify patterns and reveal insights that may otherwise be overlooked.
With this information at hand, your business would thus be able to provide a more streamlined payment process, thus improving the customer experience.
4. Rise Of Robo-advisors In Investment Planning
As a financial services firm which offers investment planning and portfolio management for your clients, you need to take various factors such as your customers' income, investment habits, personal financial goals and risk tolerance into account.
Today, FinTech development of AI has advanced to the point where robo-advisors have evolved from online questionnaires, to fully-automated, AI-powered algorithms that require no human supervision.
Because of these, the use of robo-advisors have become more popular in recent years. By one estimate, they'll be responsible for managing more than US$4 trillion in financial assets for consumers around the world by 2022.
Robo-advisors will continue to be refined even further in the next few years, becoming ever more powerful self-learning algorithms that are better able to aid customers in their investment choices.
Therefore, it may be worth considering the benefits of complementing your financial planning services with a robo-advisor in a hybrid model, such as the one practiced by AutoWealth Pte Ltd.
5. Automating Customer Service Through AI-powered Chatbots
Prompt customer service is a top priority for financial services firms like yours, as 93% of their customers would be more likely to come back with repeat business if they get it.
In addition, 90% of customers demand immediate responses to their enquiries. Failing to provide such a prompt response, therefore, presents a rival business to achieve a competitive advantage by providing a quicker response.
FinTech firms have developed AI-powered chatbots that help financial services firms like yours achieve this instant responsiveness to your customers' enquiries.
Not only do these chatbots allow your financial services firm to upload FAQs for their customers and direct them to customer service officers for more complex enquiries, they also collect data that could generate valuable insight into your customers’ needs.
This enables financial services firms like yours to provide a better customer service experience, and also saves time and money that would otherwise be spent on additional customer service officers.
AI Developers In FinTech Are Focusing On ERP Software
AI is, without a doubt, an important technology for financial services firms like your business in the coming years.
However, when it comes to incorporating AI and ML technologies into your business processes, where should you start?
You may be surprised to learn that the ERP software, being an important collection spot for essential business data, has emerged as the No. 1 target of AI and ML developers in FinTech.
According to research from Evans Data, 58% of the developers who were surveyed are planning to integrate, or have already integrated AI into their ERP software.
As such, an ERP software is the ideal platform to provide a foundation for financial services firms like your business to optimise your processes with AI and ML technologies.
And with 76% of professionals having migrated their ERP software into the cloud or planning to do so, according to Oracle’s report, a cloud ERP software like Oracle NetSuite is therefore an especially solid choice in this regard.
To find out how else NetSuite can deliver business transformation for you, click the image below to find out more.