Why AI is the next step in digitizing the financial sector

Why AI is the next step in digitizing the financial sector

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With the rapid advances in technology, human lives have undergone a phenomenal change. By leveraging a host of breakthrough next-gen technologies such as AI, ML and Big Data, we are ushering in a new era of innovation in which industries from all walks of life are automating manual processes. It has helped to make our lives easier and transparent to a great extent. The financial sector has also embraced this widespread digitization. Artificial Intelligence has established itself as the standard-bearer of this contemporary digital transformation. According to a Mckinsey Global Institute report, it has been estimated that using AI to improve basic banking functions and provide personalized services to customers around the world will represent a value of more than $250 million in the whole sector.



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A plethora of new era tools such as voice assistants, chatbots, process automation and predictive analytics are redefining financial services right now. And that’s just the beginning. As we head into the next frontier of technology discovery, research and development, dig deeper into AI’s role in disrupting the financial industry, its impact on business, and how it opens up a new perspective for business. unique opportunities.

The financial sector is realizing the tremendous transformative potential of AI. Industry experts estimate that leveraging AI will help the banking industry save $1 trillion by 2030. Another Narrative Science report in 2018 found that over 32% of banks surveyed had already adopted advanced AI-based techniques such as predictive analytics, recommendation engines, voice recognition and response times in their operations.

This new wave of innovation is focused on improving the customer experience. Conversational AI, like chatbots, is also becoming a popular staple for front-end brands. Automation of processes and tasks and algorithmic analysis strengthen and elevate finance in the background. Robots are increasingly replacing employees. As reported by Gartner, robotic process automation (RPA) is highly profitable, amounting to one-third of compensation paid to an offshore employee and one-fifth of that paid to an onshore employee. RPA does the heavy lifting, a rules-based system that automates repetitive tasks and has no intelligence but is often classified as AI.

AI in finance is dominated by machine learning, but automation also plays an important role in banking. The financial sector has benefited greatly from machine learning; banks can collect and analyze large amounts of data in the financial field. Machine learning is a subdivision of AI, which allows machines to learn and evolve using data without relying on human intervention.

Voice recognition is another innovative capability of the new era that uses AI to perform banking through voice commands. At the heart of this innovation is automatic natural language processing (NLP). This AI-powered technology is used to develop many virtual assistants (augmented agents) and chatbots such as Capital One’s Eno.

In the financial sphere, leveraging AI offers two distinct benefits: first, a large increase in efficiency, and second, fewer loopholes that can be exploited for fraudulent purposes. This AI-powered lending trend initially showed up – like so many others – among Silicon Valley tech startups, but Wall Street and various Indian entities quickly embraced it. Given that market investing is typically dominated by individual fund managers with a popularity mandate, it can be hard to imagine their influence being supplanted by AI. However, AI-based beta funds can significantly reduce the risk of human error thanks to their constantly evolving rules and algorithms.

Other significant factors driving the growing demand for AI in finance include the proliferation of cheap and efficient computing resources, the corresponding digitization of financial services, and the explosion of available data on individuals and organizations. .

The new permeation of advanced technological paradigms such as artificial intelligence has taken the financial industry by storm. With a plethora of next-generation technology applications and industry-disrupting use cases, technologies like AI and ML have enormous potential to transform the industry for the better. Unsurprisingly, countless investment banks and financial startups are using the best artificial intelligence to increase profits, maximize efficiency, reduce errors, and generate the highest possible returns.

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