AI in the modern world: artificial intelligence in finance
If you think about fintech, you have to think about artificial intelligence. Since the 1980s, AI and finance have gone hand in hand.
Wall Street has long been getting a little help from some impressive algorithms. In fact, according to a report by Thomson Reuters 75% of global trades are handled by algorithmic trading systems. In other words, artificial intelligence already has its feet firmly planted under the table of world finance.
With AI startups raising more than $2 billion in venture capital funding last year, both the banking and insurance sectors are expected to reap the benefits of chatbots, streamlined processing, and data analysis. So what will the future of finance look like?
Big machines don’t cry
Humans are just too emotional to handle the stock market. Or at least, that’s what one AI startup believes, which is why it has created one of the first Hedge Funds run completely by AI technology. Sentient Investment Management from Sentient Technologies is founded by Babak Hodjat, an entrepreneur that previously worked on Apple’s Siri.
This seems like a good idea. Hedge funds are complicated and involve large amounts of data, so AI seems a natural fit. But can we really replace humans completely? Would we really be happy to put all of our money in the hands of the machines? At the moment, no.
When it comes to investments, the popular consensus is that AI and humans working together is the best outcome. A little bit of emotion can still be a good thing. While AI can trawl through the piles of data and statistics and monitor trading patterns, the future of hedge funds still looks to end with a human touch.
However, one area in banking where customers are quite happy to deal more with machines is customer service. Chatbots, or ‘robo-advisors’, are on the rise in the finance sector, and no one seems to mind.
In fact, Information Age suggests that soon, “the idea that we need to phone up our bank to get things done will seem as antiquated as writing a cheque.” The big global financial players such as American Express, RBS, and MasterCard have already welcomed bots. Customers can now check their balance, ask questions regarding their accounts and lending, and even transfer money, all without having to set foot into a bank.
In 2017, bots are expected to go even further. Just this month, Capital One bank launched their own bot that communicates with emojis. What could be better for millennials?
Finding the fraud
If AI can trawl through copious amounts of data, then it can also be used to detect fraud. Millions of transactions are made everyday. The numbers are astounding, so how do banks know if it is fraud, or just a customer on holiday? By learning what qualifies as suspicious, new AI technology can trawl through the numbers and spot suspicious transactions more accurately.
Reporting these anomalies quickly and effectively can save customers thousands of pounds, and hours of heartache. As fintech grows, and online and app banking becomes even more prevalent, the fear of fraud can increase. With AI taking up the fight against fraud, customers can feel more confident and secure – and protected.
As fintech grows, and online and app banking becomes even more prevalent, the fear of fraud can increase. With AI taking up the fight against fraud, customers can feel more confident and secure – and protected.You can’t put a price on that.
You can’t put a price on that.
The investment stampede
Fintech has always attracted big investment, and with AI making big inroads into the area, it’s no surprise to see the money is flowing this way. A new report from Startupbootcamp and PwC released this month shows that even Brexit can’t shake the fintech investment.
Nine of the top 20 UK FinTech deals closed post Brexit, with the total investment for this period tallying $368m.
The report also showed that 16% of the entrepreneurs working with Startupbootcamp were concentrating on AI and machine learning. They are ready to focus on smarter and faster machines that will solve our financial problems.
It will be interesting to see where AI will take fintech, but when it comes to the financial sector, our money is on AI to disrupt it.