Technologies like Artificial Intelligence (AI), Machine Learning (ML), and automation are driving the revolution we’re seeing in the finance industry. In just a decade, we’ve witnessed the emergence of digital banks, lending platforms, and tech-driven wealth management startups, all of which are starting to challenge traditional banks.
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Closer to the present, new trends have surfaced, which could transform the space even more radically. One of these, autonomous finance, is already having a major impact on how banks and FinTechs function. It could unlock whole new possibilities for players in the sector, and yield positive outcomes for those that latch on to it early enough.
What Is Autonomous Finance?
Autonomous finance basically refers to financial services powered by algorithms, which make it easier for customers of financial institutions (and other businesses) to manage their money. It involves converging automation, AI, and Machine Learning into a potent solution that simplifies banking for account holders.
The promise that autonomous finance holds lies in the ability that it confers on its adopters to detect patterns in their customers’ banking behaviour. They can then leverage this knowledge to automatically and quickly offer customers their needs.
Examples of autonomous finance in action include InsurTech platforms presenting their users with insurance policies that fit their unique needs. Another would be a robo-advisor that automates trades on the stock market for its customers. In both cases, the technology operates based on the behaviour or previously set preferences of its users.
There are other use cases and scenarios for this convergence of technologies. And we’ll see even more emerge, as FinTechs and other businesses begin to apply AI and automation more widely.
Benefits Of Autonomous Finance
These are some ways that autonomous finance benefits financial institutions, including FinTech companies.
Enhanced Customer Experience
Autonomous finance lets businesses quickly collect data about their customers’ behaviour with respect to finances, and rapidly analyze such data. This in turn makes them able to predict their customers’ needs at any given moment. With this ability, banks and FinTechs can tailor their services to suit each account holder, and improve the overall user experience.
Understand Customers Better
We already hinted at this in the first point above. Autonomous finance gives financial institutions the power to decipher patterns in their customers’ behaviour.
If those patterns are significant enough, they could give FinTechs good clues as to how the customers concerned could act in the future.
The predictive power present within autonomous finance enablesFinTechs to offer products that meet their customers’ expectations—with previously unseen degrees of precision. Although the average FinTech already promises personalized service, they could get much better at delivering on this promise in the coming years, thanks to AI and advanced automation.
Gain Important Insights
Financial service providers can learn a whole lot about the demand for their products by applying the tools of autonomous finance to the troves of data they collect. For example, they can determine what changes they should make to their account offerings, or what new products they should develop, based on the information they garner from AI-driven analysis of customer data.
Resolve Issues Faster
Customer-facing desks at FinTechs and other financial institutions can delegate the simpler, more frequently asked questions from customers to chatbots. This solves two problems. First, it lets customers get quick, error-free answers to their most basic inquiries. It also allows human agents to take on fewer but more complex customer requests, and have enough time to deal with those.
Confers Competitive Advantage
Businesses that take the path to autonomous finance will gain a competitive advantage over those that don’t. The other benefits that it yields—better customer experience, personalized service, and quicker resolutions –can converge to give such businesses a strong hold on the markets that they target.
There’s a lot that FinTechs can achieve with autonomous finance. By leveraging the right combination of automation, AI and Machine Learning, they could strike gold in their engagement with users of their platforms, and make loyal customers of them.Featured Image Source: Forbes
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