Before AI and the rise of FinTech, very few industry giants had the bandwidth to deal with the inherently quantitative nature of our now tech-savvy world. These AI use cases detail how AI has been a game-changer for FinTech.
We’ve scoped out these real-world AI use cases so we could detail how artificial intelligence has been a game-changer for FinTech. Few verticals are such a perfect match for the improved capabilities brought by the AI revolution like the financial sector.
Traditional financial services have always struggled with massive volumes of records that need to be handled with maximum accuracy.
However, before the advent of AI and the rise of Fintech companies, very few giants of this industry had the bandwidth to deal with the inherently quantitative nature of this world. (Read Fintech’s Future: AI and Digital Assets in Financial Institutions.)
Banks alone are expected to spend $5.6 billion USD on AI and Machine Learning (ML) solutions in 2019 — just a fraction of what they’re expecting to earn since the profits generated may reach up to $250 billion USD in value.
From automating the most menial and repetitive tasks to free up the time to focus on higher level objectives, to assisting with customer service management and reducing the risk of frauds, AI is employed from back-office tasks to the frontend with nimbleness and agility.
1, Fraud Detection and Compliance
According to the Alan Turing Institute, with $70 billion USD spent by banks on compliance each year just in the U.S., the amount of money spent on fraud is staggering. And when the number of reported cases of payments-related fraud has increased by 66% between 2015 and 2016 in the United Kingdom, it’s clear how this problem is much more than a momentary phenomenon.
AI is a groundbreaking technology in the battle against financial fraud. ML algorithms are able to analyze millions of data points in a matter of seconds to identify anomalous transactional patterns. Once these suspicious activities are isolated, it’s easy to determine whether they were just mistakes that somehow made it through the approval workflow or traces of a fraudulent activity.
Mastercard launched its newest Decision Intelligence (DI) technology to analyze historical payments data from each customer to detect and prevent credit card fraud in real time. Companies such as Data Advisor are employing AI to detect a new form of cybercrime based on exploiting the sign-up bonuses associated with new credit card accounts.
Even the Chinese giant Alibaba employed its own AI-based fraud detection system in the form of a customer chatbot — Alipay.
#fintech #artificial intelligence
