Artificial Intelligence: a trillion-dollar opportunity transforming all industries, globally.
- What is AI and why does everyone keep talking about it
- AI in the financial services industry
- Where are the opportunities for AI in the financial services industry?
- Where are you on the Artificial Intelligence journey?
- Artificial Intelligence transparency
Precedence Research estimates that the worldwide artificial intelligence industry will be worth $87.04 billion in 2021. Retail, automotive, shipping, and the pharmaceutical industries are some of the more obvious ones where AI has been applied since its inception. The market is anticipated to reach $1,597.1 billion by 2030, with a CAGR of 38.1% between 2022 and 2030.
According to a forecast by Bloomberg, the worldwide AI in fintech business would be valued $41.16 billion by 2030. This indicates that the global financial services sector will adopt AI and utilize its benefits at a similar rate. With significant advantages come some hazards, which must be minimized in order to give clients unforgettable experiences.
What is AI, and why is it always being discussed?
Artificial intelligence (AI) refers to a computer or machine’s capacity to think rationally, learn from experience, interact with its surroundings, solve issues, and even exercise creativity. Even while we are moving in that direction responsibly, we are still not there yet.
AI has a significant influence on how we work and perform, given its enormous potential. It is presently among the most well-liked business topics.
AI’s application in the financial services
industry The financial sector can be compared to other industries. To become more successful, efficient, and to give their customers and workers more memorable experiences, fintech companies and banks must develop and execute “best-in-class” AI solutions. An AI approach must develop into an significant component of the company strategy for a long-term competitive edge. The entire industry has seen a significant transition during the last few decades:
The advent of new technologies has led to all these developments, and one of the technologies with the greatest influence on the industry is artificial intelligence (AI).
Where may artificial intelligence (AI) be used in the financial services sector?
It is without dispute that federated learning, cutting-edge machine learning, and deep neural networks have a tremendous impact on the financial services industry. Personalized banking services, better and more effective fraud detection, improved customer services, and automation of back-office processes are all made possible by AI in the financial services sector. These processes include credit decisioning and financial risk management.
AI has the potential to drastically alter how decisions are made in the financial services sector. Financial service providers must be willing to collect, clean up, and analyze data from both conventional and unconventional sources.
Increased income, personalized and innovative goods and services, improved risk assessments, and memorable customer experiences will all be made possible by data and AI-driven choices. Big Data is a crucial resource that allows financial service providers (banks and fintechs) a distinct tactical edge for facilitating automated and predictive decision-making.
What stage of the artificial intelligence journey are you at?
If you’re one of the companies offering financial services that is eager to incorporate AI, hold off on developing and implementing a quick-fix AI solution. To learn from the data and obtain profound insights, it is essential to capture it completely, organize it well, and use innovative modelling tools and methodologies.
Start with an AI Readiness Assessment Framework, as shown in the example below.
A crucial component at every level, from the creation of the business case through the realization of the benefits, is consultation with numerous stakeholders across the whole organization.
Transparency in artificial intelligence
Transparency is key in the financial services sector when it comes to preserving public confidence in AI and your personal reputation. Just knowing that a model functions properly is not sufficient. Financial service providers are interested in the specifics of how and why the model functions. The industry is heavily regulated, thus a different strategy than that utilized in other industries is required. Algorithms that suggest the next YouTube video to users might not require the same amount of openness as those that suggest the next great trade or investment product for them.
Another difficulty is the interpretability of AI systems and the requirement to understand why the AI solution chose one course of action over another.
The two that matter the most are changing the input weights to gauge the effect on the outputs or, alternatively, employing surrogate modeling. With the most recent developments in XAI or Explainable AI, they will soon become an essential component for the deployment of AI models in real-world applications.
In conclusion, early AI adopters who will use AI to improve operational efficiency and revolutionize their decision-making process will succeed as the competition in the financial services market heats up.
RELEVANT INFORMATION ABOUT THE AUTHOR
FinTech Maximisers, an organization focused on AI innovation, was founded by Sid Joshi, an expert and speaker on “AI in Financial Services.” The organization’s goal is to maximize ethical AI’s advantages for everyone in the global financial services sector.
Sid has advised the top financial services firms in the world on their digital and AI strategy and transformation journeys, bringing with him more than two decades of worldwide expertise. He uses his expertise in the financial services sector and enthusiasm for FinTech and AI-led innovation to help develop and implement practical solutions to challenging business issues.
Sid has used a data-driven methodology to analyze the business and operational models (investment appropriateness) of several financial technology (FinTech) start-ups for a variety of investors. He is also an instructor and writer in the field of financial technology (FinTech), and his creative ideas have appeared in a number of prestigious international magazines, including US Banker, Global Treasurer, Bank Technology News, Guides to Cash, Supply Chain, and Treasury Management, among others.