Over six decades have passed since the earliest concept of artificial intelligence was introduced. However, it’s almost unbelievable to see how far the ideas has come. Today, AI represents an industry worth almost $10 billion and by 2025, it has been projected to reach around $118 billion.

Lots of people still think that artificial intelligence is the stuff of science fiction, but the truth is that it’s becoming more and more mainstream. If you’ve ever played a live dealer game at an online casino, for example, that’s AI in action without you even realizing it.

Thanks to the immediate applications of artificial intelligence in improving customer service, streamlining processes and managing risk, AI has been adopted widely by some of the biggest players within the financial industry. Machine learning is becoming increasingly commonplace already in the payment and banking sector, with robots now analyzing loans and transactions and NLP replacing call center employees and front desk services.

So, how is artificial intelligence revolutionizing the financial sector of today?

Improved Risk Evaluation

AI is powered by machine learning, and therefore it excels at finding data patterns. Credit companies are harnessing this potential. With piles of existing information about past customers, varying from socio-graphic and demographic insights to their adherence to their payment schedules, they can use these tools to show the chances of them defaulting with even greater accuracy than a human ever could.

It's also possible to extrapolate those kind of solutions so they can assess the possible risks posed by borrowers with no existing credit history such as immigrants or college graduates, based on some of their other traits which will include them within a certain risk cohort. Thanks to these decision making tools, the process of underwriting could become increasingly automated, slashing processing times and reducing costs exponentially.

Not only that, but AI could help to flag any credit card customers who have a higher risk of failing to pay or making late repayments on their debts. Those models could also be adapted to combat credit card fraud by comparing the individual’s using spending pattern and their geolocation to any attempted payments in real time.

While the consumer market will certainly benefit from artificial intelligence in the financial sector, the B2B market can also make a huge difference within the trading arena. Algorithms can be developed to carry out automatic trading to match specified hedging rules. They can also sell or buy on the spot, make predictions and place future orders all based on estimations of trends.

More Personalized Customer Service

At the present time, the financial industry is spending a lot of time, effort and money on support personnel to carry out customer care and back office roles. Those jobs are very repetition, need excellent attention to detail and have a high level of stress which results in high turnover of employees. Some of those jobs could be replaced by automation bots and chatbots to deal with customers and processes. For those who are worried about losing their jobs, it’s important to note that call centers won’t be eradicated, but human agents will be freed up instead to handle non-standard problems and issues. Meanwhile, boring and repetitive tasks can be handled by the machines thanks to natural language processing that allows them to respond in a manner similar to a human agent.

Banking chatbots act as personal clerks 24 hours a day, 7 days a week. They may also become financial advisors that help customers to make timely payments, manage their risky spending behaviors and save more money. Standard self-help features like paying bills, making recurring payments and checking balances can all be handed over to AI assistants which will learn from the operations that they regularly process and come up with more valuable suggestions that customers can benefit from.

Improvement To Processes

As we already mentioned, the finance industry utilizes many extra services, and these, in turn, usually translate into a huge amount of paperwork to be stored, indexed, verified and classified. Artificial intelligence is able to assist with all of these dull tasks.

Identify theft represents a serious concern for any financial or banking organization. Tools such as Confirm.io are able to confirm the validity and identity of documents and save customers the hassle of having to visit their bank branch. Image recognition which has been highly tuned makes this possible.

There are also many more algorithms emerging which are focused on the management and compliance of legal documentation. These include a number of features for comparing versions and error checking, with the capacity to allow several editors to make changes while also enabling risk analysis and fairness.

In areas where the GDPR does not apply, it is now easier than ever to design tools which allow for faster background checks – a key element of the process of approval for credit. These could make use of interlink databases like driving fines and criminal records, evaluating any risks on the spot. These too use natural language processing to allow them to scan for any cases of potential misuse.

What Can The Financial Sector Take From This?

Finance is just one sector which is rather late to the party when it comes to adopting new technology because of various compliance and regulatory requirements. However, by its nature, the financial industry is also extremely interested in slashing its costs. This has led to artificial intelligence developers having to try even harder to enter into this lucrative market. Now the tech is beginning to go mainstream, however, and that means that the market’s potential extremely high payoffs are beginning to come to fruition.

At the moment, artificial intelligence is most likely to be used in the financial sector to improve the trading, B2B and consumer sectors. The focus for the near future is almost certainly going to be on preventing fraud, cutting costs and personalization while also ensuring compliance, managing risk and automating more tasks. Yet, as technology progresses, who knows where the future of AI in the finance industry will take us?