Is AI the Future of Fintech?
The prevalence of Artificial Intelligence (AI) in fintech is growing steadily and experts believe the next few years will show a particularly notable increase in the use of this flourishing technology for improved financial controls and operations. Along with the software and platform fintech arena, AI enabled products and services will impact on managed services, cloud deployments, and applications in the fintech spectrum, all of which already extract significant amounts of data, thus encouraging broader use of analytics and AI interventions. Unsurprisingly, global giants such as Microsoft, Google, IBM, and Amazon Web Services are key influencers in the expansion of AI into fintech but a current lack of skilled professionals able to combine AI technology with fintech innovations is a serious impediment to the partnership.
According to Richard Peers, Director of Financial Services Industry at Microsoft, AI is the future of fintech, in part because the huge volumes of data being garnered could never be responded to quickly enough without it. He also predicts that in the coming years we’ll see a surge of AI jobs previously unimagined. Currently, specialists such as Machine Learning engineers, data scientists, business intelligence developers, and computer vision engineers are in high demand, and though we can expect growth in each of these fields, new collaborations such as the trending fintech/AI alliance will likely keep the AI career path highly dynamic.
The original fintech disruption is old news and though we continue to see enhancements to money lending solutions, funding schemes, mobile payment platforms, and investment tools, the fintech landscape has achieved a good degree of acceptance in the mainstream. AI, however, is currently finding its way into several fintech categories including insurance, personal finance, compliance and fraud detection, and debt collection, and as such is ensuring the fintech industry continues to evolve and innovate at a steady pace. At present, China shows the greatest fintech investment of over $10 billion in 2017, and says Albert Chan, Accenture’s Managing Director of Financial Services in China, “Many of China’s financial service companies are making investments in fintech companies and exploring cutting-edge solutions such as blockchain technology.” Experts suggest that AI, with its promise of deep learning and speedy decision-making, is a significant driver of such investment.
A notable dilemma, however, regulation has for some time been considered an obstacle to fintech development though most recognize the necessity of at least some form of control; in the US the concern is that an overly complex regulatory environment is preventing fintech success and allowing European competitors an unobstructed race to the finish. AI has regularly assisted with ensuring compliance but encouragingly there is a strong feeling that going forward it could be used to manage the intricacies of compliance through automation of monitoring and awareness, and to translate ambiguous rules into arrangements easily decoded by machines. AI could be the next step to increased compliance efficiency, which may result in reduced costs associated with compliancy but an overall boost to regulatory fulfilment; such regulatory demystification promises continued fintech progression.
It seems going forward that AI will have a meaningful role to play in fintech in both discernible and covert modes, and it may indicate a new disruption in the financial services industry. Proficiency, accuracy, and a deeper utility of data are aids AI brings to every industry it enters, but perhaps fintech with its risks and consequence most needs this dispassionate assistance. Of course, no matter the automation, analytics, and deep learning applied, the financial sector will likely always hold a certain level of risk and we can’t expect a fintech-AI collaboration to rid the world of economic strain just yet.
By Jennifer Klostermann