How Does Artificial Intelligence Apply to Fintech?

The RIQ News Desk
Banks are looking at harnessing the potential of AI, despite latent teething issues

Artificial Intelligence (AI) is making unending waves, both positive and negative. While some experts are going gaga over its productivity orientation and task precision, a few others are expressing concerns over the social impact due to the loss of jobs to robots. A single fact overrides these opinions—all sectors are without question exploring how they can leverage AI to better business, banking being no exception. For example, last year, RBS replaced some of its human employees with automated services. This is just the beginning, as machines slowly but steadily make their presence felt in the fintech sector.

Industry analysts today opine that artificial is the new normal, and will rise to become the core of any technology organization. The fact is that every organization today is already, or is on the path to, a technology focus. AI, along with other emerging technologies such as mobile, social, cloud, and Internet of Things, is already changing the way we work, according to Accenture CTO Paul Daugherty.

It is no surprise that entire nations are shifting their focus to AI. For example, the UK government recently announced a plan to review the role of robotics in the country’s objective to become a world technology leader. The nation plans to invest to the order of £17.3 million in Apple’s Siri, Amazon’s Alexa, and autonomous cars. According to Accenture, this move can add around £654 billion to the UK economy. However, fewer voices are talking about the flipside—the loss of jobs and people skills being deemed irrelevant, not only for today, but for the future as well. This is a grave side effect, with the potential to cause a social uproar, if not handled well.

Fintech analysts too expect a similar response to the rising dominance of AI in the business of banking. The perceived negative impact as outlined above may be much higher in banking, especially, since this field deals with the bare basics, i.e., money management. New systems will be introduced, and customers will take more time to adapt to the change. One can expect lots of teething and trust issues at the outset, and when trust comes in the way of managing one’s hard-earned money, it does not paint a great picture.

Initially, AI will challenge the very fundamental needs of people—money security, ease of money management, and placing trust in money managers. The outcome is that AI in fintech will take much longer to become mainstream and be accepted by a larger audience, as compared to what it takes in other sectors.

One of the customer segments that will be more receptive to AI in fintech will be the millennials. The growing use of the smartphone as a money management tool is one of the starting points for organizations to experiment with AI in fintech. Companies are fast realizing this. At the Mobile World Congress, Telefonica announced that it would soon launch an AI-powered digital assistant called Aura.

Fintech companies must look at AI not as a standalone technology, but in conjunction with others. For example, Amazon Echo and Microsoft’s HoloLens and other augmented reality applications can be combined with AI capabilities to meet fintech needs. If AI were to drive a change in fintech, the approach should be to think beyond the obvious, and to envision the big picture and the big possibilities for change.