By Gunjan Bhardwaj
The financial sector is the cornerstone of every market. Banks, venture capital firms, and fintech companies help fuel other industries by providing key services that help businesses protect their assets and grow.
Unfortunately, it’s also an incredibly complex industry, plagued with challenges that seem to come from every corner. Regulatory constraints offer protection, but often slow down innovation. High costs associated with errors place an enormous amount of financial risk on companies when making key business decisions. In many cases, those costs are then passed down to their customers.
While these complexities are not easily solved, there has been a wave of technologies seeking to help tackle the problems facing the financial industry. These solutions are aiming to improve not only the experience for end users, but also the business performance of companies, government agencies, and experts in this space. Some of the most promising are AI and machine learning technologies geared toward helping improve financial services.
A PwC study found that around 66% of financial services professionals haven’t engaged with AI solutions yet. Most attributed this to cost, operational, and regulatory barriers. While these applications haven’t been universally adopted, we are optimistic about the future of the technology and its applications in the financial sector.
Fraud Reduction
One of the biggest challenges in the financial and banking field is the complexity involved in identifying fraud. By leveraging better AI platforms and solutions, however, companies can automate the analysis of massive amounts of data. This means fraudulent actors and other threats can be recognized and dealt with faster.
Know Your Customer
For example, when it comes to Know Your Customer processes, manually assessing customer credentials takes time. In most cases, these processes still depend on a certain degree of human judgment.
When you leverage AI to automate Know Your Customer processes for wealth management and investment teams, it is possible to take a process that takes hours or one that often results in human error, to an automated process that reduces instances of fraud in a fraction of the time.
Decision Support
Most of the time when you hear about AI for financial services people talk about robo-advisors. They rarely take into account how AI can offer decision support for human experts. Anand Rao, US Analytics Group Innovation Leader, said it well, “Artificial intelligence can help people make faster, better, and cheaper decisions. But you have to be willing to collaborate with the machine, and not just treat it as either a servant or an overlord.”
Advanced AI and machine learning algorithms can help identify issues that would take human experts hours or even days to recognize.