AI will transform finance, but personalized card benefits won’t

If you read any business or financial news, it’s hard not to notice that Davos was held again last month. I rather agree with Andrew Currie.He says the worst part of the event was: It’s a temptation to take it seriously., However, business leaders will be there to give speeches, so it can be helpful to listen to them and find important themes. As expected, artificial intelligence (AI) took center stage this year.

AI is the future of fintech

Brian Chan, executive director and co-founder of the Cambridge Center for Alternative Finance at the University of Cambridge’s Judge Business School, presented research on the future of global fintech. The study covers five sectors (digital lending, digital capital raising, digital payments, digital banking and savings, and insurtech) in Asia Pacific, Europe, Latin America and the Caribbean, Middle East and North Africa, North America, and Asia Pacific. We collected data from 227 fintech companies. Sub-Saharan Africa region. Almost three-quarters of those surveyed cited AI as the most important element in the development of fintech over the next five years (and almost half cited embedded finance, open banking, digital economy).

I think these findings are indisputable. Everyone agrees that the fintech space is about to be significantly transformed by advances in artificial intelligence (AI) across many sectors. But how exactly? And where are the biggest impacts? As you scan through various reports, newsfeeds, and posts, you’ll see that many key business functions are affected. Here are some of them:

Personalized banking and services: Based on the large amount of historical data available to banks, one of the first and most obvious uses of AI is to push more personalized products and services to customers. AI helps banks and fintech competitors create personalized services, from customized credit cards to unique savings plans.

corporate compliance (RegTech): AI can help develop systems that can automatically adapt to new regulations and ensure compliance more efficiently. In my view, the next really big fintech businesses will actually be regtech businesses, and AI will certainly enhance them.

Enhancement of robotic process automation (RPA): In their book “the future of finance”, Henri Arslanian and Fabrice Fisher pointed out that automation is possible with relatively simple RPA technology, but more complex processes with more diverse inputs require more sophisticated techniques. . Therefore, combining AI with RPA will result in cost savings and increased efficiency for financial institutions.

Credit decisions and risk management: AI systems will help financial institutions make better lending decisions and manage risk more effectively. As a result, the market is moving in the following directions: Insight-driven lending Instead of expert judgment, you can maximize rejections of high-risk customers and minimize rejections of high-credit customers.

investment and trading: Mihir Desai, Professor of Finance, Harvard Business School point to Two major confusions. The rise of passive fund managers and the growing dominance of quantitative investing due to its ability to quickly analyze large amounts of data. He believes these trends in finance suggest that an AI-dominated future could soon produce “big” winners and losers.

Customer support and chatbots: AI-powered chatbots and virtual assistants will become more sensitive and capable of handling complex customer service inquiries, providing immediate support and freeing up human resources for more strategic tasks. Become. Personally, I’m interacting with a chatbot at my bank and I don’t really care if it’s human or not, as long as it does what I want.and

Fraud detection and security: Because of the tsunami of fraud that AI will unleash and the corresponding fintech opportunities to leverage AI to help us reach greater heights, as discussed in a recent U.S. Financial Services Commission hearing, I think this area is of particular concern. Opportunities and risks related to AI.

All of these uses for AI are, frankly, completely unremarkable. But I think what’s missing in a lot of this kind of analysis is a recognition of the fact that it’s not the banks’ use of AI, but the customers’ use of AI, that is taking this industry in unexpected directions.as I wrote here beforefinancial services organizations must strategically pay attention to the impending switch from human customers to machine customers.

Convince my bot!

The excellent Kathy Huckle wrote about this a few years ago and said that because traditional marketing is all about the consumer, marketers spend their efforts creating compelling stories to connect with consumers. I pointed out that there is. Their goal is not just to create demand for their product, but to build a relationship with their brand. This is great for B2C and B2B2C, but what happens when the world goes from business to robots to consumers?B2R2C) Commercial?

What happens to the knowledge and experience accumulated in retail banking marketing departments when banks have to convince robots, rather than humans, that their deals are the best in the market? Robots don’t care about Super Bowl commercials. I won’t. Robots don’t care about race team sponsorships. Robots are completely indifferent to brand colors and logos.

But what do they care about?

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