How artificial intelligence has changed finance
Applied to the finance sector, artificial intelligence is able to give us very useful services that have changed the way we interact with banks and manage our capital. It is one of the most pervasive technologies available and one that has resulted in concrete innovations that are felt by many.
Artificial Intelligence: what it is
Defined as “the ability of a machine to exhibit human capabilities such as reasoning, learning, planning and creativity”, artificial intelligence is able to make systems understand their environment, and perceive and solve problems with a specific goal. Placed in a context, with a specific purpose, AI systems are shown to be able to learn and adapt their behavior by observing the reactions elicited by their previous actions, and do so with full autonomy.
Artificial Intelligence Applied to Finance
The financial sector, and fintech in particular, which is the one most prone to technological innovation, are the ones that have believed in the potential of artificial intelligence right from the beginning. It’s no coincidence then if they can now enjoy its benefits through the creation of services that arouse the interest of the market and never stop evolving and enriching. Analytics, cognitive computing, chatbots, machine learning: companies are drawing on the many tools offered by AI, making the most of them to build an increasingly rich and personalized offer, able to satisfy customers who not only want to save money but also invest their money it intelligently. If we take a look at the fintech companies that are active today, even only in Italy, within the Fintech District community, we can explore the many ways in which this technology can be used to create new services, and the many possibilities can be summarized in six paths to follow. Without taking away from the alternatives that other fintechs are pursuing with perseverance.
6 ways to use artificial intelligence in finance
The goal is always to meet the needs of customers, especially younger and more digitized ones, or to surprise them with innovative and novel products. This is how fintechs and even some more traditional banks are applying artificial intelligence.
AI & Risk management
Within the current times, this is one of the most interesting areas in which artificial intelligence can prove to be an almost infallible ally. That’s because it can independently record and learn from past data, and in finance there’s plenty of that to rely on to make calculations and assessments. The goal of risk management services is to always be able to make accurate predictions about the market starting from existing information and identifying trends, identifying risks and the best way to grow your finances without exposing yourself to too much uncertainty.
AI & Credit Analysis
Banks and credit institutions have always had the “problem” of having to make decisions about the people who approach them for a mortgage, or a loan for example. Thanks to artificial intelligence, today they can have more factors and information on which to base themselves in order to evaluate as accurately as possible the less well-off and traditionally “disadvantaged”, such as millennials, perhaps not excluding them from the start. This shows the inclusive power of fintech and of new technologies. By collecting and analyzing data, it is now possible to also know the repayment habits of each individual, having a clear picture of the loans active at that moment, the credit cards in their name and many other data, at times even unstructured, that can be of great help to personalize financial services, the interest rate on a card for example, or on a mortgage. Theoretically, even an operator could do this, but taking much longer time and with a greater margin for error.
AI & Robot Advisor
By applying algorithms and mathematical formulas to data on markets and customers, it is now possible to provide financial advice enhanced by artificial intelligence. This is not to discredit the value of the human experience of those who have been doing this job for a long time, but to support it with a careful and effective data analysis that allows for more timely and satisfactory investment management advice. In fact, we are also working on bionic consultancy, which combines the computational power of machines with the valuable contribution of human intuition, arriving to provide options that are much more efficient than those provided by individual elements separately. For the customer this means not only quality advice but also availability 24 hours a day.
AI & Cybersecurity and Fraud Detection
With the healthcare emergency, cybercrime attacks have increased and it is increasingly important to arm yourself to defend and protect yourself. These are occurring in large numbers and in increasingly sophisticated ways because of technology,but thanks to it we have artificial intelligence and through it you can better defend yourself. By training machine learning on the vast amount of data available, cyber security efforts can be intensified to the point where software can distinguish between real users and bots.
For example, by observing past spending behavior on different transaction channels, you can readily identify anomalous movements, strange withdrawals with unusual amounts, or credit card use in unusual places. This type of identification is also refined over time, learning more and more to understand acceptable behaviors and those that are suspicious and cause alarm.
AI & Finance Management
Personal and business, financial management has always been a key concern for everyone, and artificial intelligence can make great strides in this regard. It’s possible to build increasingly advanced algorithms that help users make the best decision from time to time based on a huge amount and variety of data that a human would certainly not know how to process. A further advantage lies in the coldness of the machines that will not be influenced or frightened by chatter or influences of any kind.
AI & Trading
Being able to use advanced algorithms, computing and big data to predict price movements is certainly a step that has revolutionized the world of trading. Infallible tools don’t exist yet and maybe they never will but you can certainly count on effective and objective, timely and accurate forecasts. By setting the level of risk considered, there are algorithms able to suggest the best personalized solutions.