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  In the last few years, we’ve watched innovations in FinTech drive change in the financial services industry. Products offered by banks and FinTechs have become more personalized, and have introduced levels of efficiency that previously did not exist. And customers of these firms have been the better for it.
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Artificial Intelligence could drive an even more impressive change in FinTech. While still in its early days, it’s shown promise in the areas to which it’s already been deployed. As AI is embedded across the financial technology product landscape, we’re likely to see service provision executed at lightning speeds, workloads distributed and handled more efficiently, and customer satisfaction levels rise to new highs. This article explains four ways Artificial Intelligence could revolutionize FinTech in the next few years. Here they are.

Customer Service

Despite their best efforts, banks and FinTech companies still struggle with customer service. They often have to attend to numerous inquiries at once; as a result, they wind up leaving a significant number of customers dissatisfied. AI-powered chatbots could prove to be a game-changer in customer service delivery. These chatbots can be built to attend to the most frequently asked questions, thus taking a significant portion of customer service agents’ workloads. This leaves the human agents with less work and enables them to attend to the more complex issues that customers report to them. Several Nigerian banks have already introduced AI-driven chatbots that handle some of their customers’ requests. As we head into the future, we can expect the quality of work done by these chatbots to improve, as banks and FinTechs get a firmer grip on AI and the many ways that it can be tweaked and deployed.

Security

Most banking and FinTech applications still require their customers to secure their accounts with personalized usernames and passwords. While this has helped to prevent break-in attempts by unauthorized actors, some cybercriminals have managed to outsmart password-backed security and gain access to their victims’ accounts. Cases like this are on the rise. IT security experts now predict that the old password-and-username security model could be replaced by stronger access technologies, including speech, facial, and fingerprint recognition. These biometric systems are enabled by Artificial Intelligence and offer better security by making hard-to-clone features unique to each use the basis for their account’s protection. A good number of financial institutions have begun to offer AI-driven biometric security. Improvements to this feature are constantly being produced and rolled out. The quality of these protections should get better over time.
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Fraud Detection

Fraud costs users of banking and FinTech platforms a lot of money. But until fairly recently, these companies have only been able to advise fraud prevention measures and tried to track down perpetrators of already executed frauds. Identifying the activities of fraudsters prior to their going through with their fraudulent intentions has been largely difficult to achieve. But thanks to smart systems that rely on Artificial Intelligence, banks and FinTechs are now able to detect suspicious activities in their customers’ accounts and shut malicious actors out of them before they are able to execute their plan. This is possible partly because the AI systems involved have been built to react to account activities that do not follow patterns defined as normal. As financial services firms refine their use of AI and become better at collecting user data and modelling customer behaviour on their platforms, they will become even more efficient at spotting potentially fraudulent activities and nipping them in the bud early on.

Predicting User Behaviour

Banks and FinTech companies are sitting on an immensely large and valuable treasure trove of customer data. There’s a lot they can do with that data, including feeding it to Machine Learning and Artificial Intelligence-powered tools which can help them to model user behaviour better. These models can then be used to predict the actions of customers in the future. One product type that could benefit from this technology is business and consumer credit. By measuring potential borrowers’ past incomes, expenditures, and loan collection and repayments, intelligent systems can provide loan platforms with information that allows them to predict the loan applicant’s ability to repay a loan if it is given to them. The predictive power of AI could lead to the development of other digital products and services that are tailored specifically for individual customers. These ultra-personalized services may eventually become the rule (and not the exception) in the FinTech industry and the broader tech ecosystem.

Final Word

Artificial Intelligence will propel the evolution of FinTech in the coming years. It could bring about several changes in the features and functions of banking and financial technology services. It will be interesting to watch how this unfolds. Featured Image Source: Bernard Marr
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This article was first published on 31st March 2022

ikenna-nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.

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