Artificial Intelligence has bagged the headlines over its role in the world, a “risk” to the humanity.
As artificial intelligence transforms an increasing number of domains, financial institutions and companies are moving fast to keep pace.
One of the change artificial intelligence brings could affect the way you bank, invest, receive loans and prevent financial crimes.
In the center of the AI revolution are machine learning algorithms, software that self-improves as it is fed more and more data, a trend that the financial industry can benefit from immensely.
AI also brought fraud detection, as e-commerce has risen in popularity, so has online fraud. For couple of decades now, combating online fraud is very challenging.
Depicting the case as worst, this data from a 2015 study by research firm Javelin Strategy, false declines, legitimate transactions that are wrongly rejected, account for $118 bln in losses for retailers.
Furthermore, a third of false decline cases result in lost customers, and in US alone they incur damage that is worth 13 times the value of actual fraud.
What does AI do to these problems?
Artificial intelligence can come in handy here. By analyzing various data points, machine learning algorithms can detect fraudulent transactions that would go unnoticed by human analysts while improving the accuracy of real-time approvals and reducing false declines.
As of now, a number of companies are exploring AI-based fraud prevention. One example is Mastercard’s recently launched Decision Intelligence technology.
To cite some of the international company that actively fighting online fraud, naming one is the Sift Science which employ a more holistic approach.
Sift Science collects data from more than 6,000 websites where its fraud detection solution is deployed. This enables it to track and analyze data across multiple channels and devices.
One of the change that the AI handed the world is the banking chatbots which powered by natural language processing (NLG) and machine learning algorithms have become a powerful tool with which to provide a personalized and conversational experience to users in different domains.
There are several ways that AI chatbots can improve the banking industry, including helping users manage their money and savings.
One of the chatbots that widely used is Plum, a chatbot accessible through Facebook Messenger, helps you save money in small increments and Cleo, a chatbot that assists you in tracking your income and expenses across multiple accounts.
Generally, chatbot lets you query your financial data in a conversational manner, as if you’re speaking to a personal accountant. The assistant can also help you by providing tips on how to manage your money and save for future plans.
Meanwhile, Bank of America plans to launch its AI chatbot Erica (a play on the bank’s name) later this year. The digital assistant, which is available through voice or message chat on the bank’s mobile app, will help you make faster and smarter decisions.
One of the best computers have always been offering, it’s crunching numbers. Thanks to machine learning, they can now take on the subtleties and complexities involved in tasks such as trading stocks.
For now, the future of AI in finance is still in its infancy, and has hurdles to overcome, including legal, ethical, economic and social challenges.