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How AI is revolutionizing the finance industry


Artificial Intelligence or AI is revolutionizing our way of life. In banking and finance, it is transforming the way people interact with money, and it has been helping firms provide optimal solution for customer demands.


The beauty of this technology is that it can translate massive volumes of data into valuable insights. For instance, consumer patterns can help detect fraud through proprietary algorithm. AI has the ability to analyze and detect irregularities in patterns, it alerts the system when something is off. It’s like when you sign-in on your emails using a new device, AI prompts you to verify that it is really you who’s signing in, otherwise, you can take immediate action to secure your account.


Moreover, AI helps companies to identify new data patterns that enable them to reach a larger audience. Other benefits include task automation, enhancing data management, and reducing the need for repetitive work. It also gives firms the opportunity to serve their customers 24/7 through chatbots.


AI is gaining momentum in the finance sector. According to a market analysis report by Grand View Research, the global AI in financial technology (fintech) market size was valued at US$9.45 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 16.5 percent from 2022 to 2030, by such time it is forecasted to be valued at US$41.16 billion.


The technology is helping both businesses and consumers make informed decisions. In corporate finance, AI can better predict and assess loan risks. It can help companies improve loan underwriting and reduce financial risk through technologies such as machine learning. 


In consumer finance, banks and financial services that utilize AI for its ability to prevent fraud and cyberattacks are more preferred by customers. Meanwhile, in personal finance, the 24/7 availability of chatbots that can provide wealth management advisory services not only helps individuals in budgeting, saving, and tracking expenses, but also empowers them because they can see that they have control over their finances.  


Financial  inclusion


AI, and digitalization in general, is paving the way for financial inclusion. 


Online banking, mobile wallets, e-commerce are now reaching those who previously had limited to zero access to banks, financial services, and markets. AI technology will not only help reach the financially excluded population, but also empower them to manage their finances, including micro, small and medium enterprises (MSMEs), many of whom are unable to access loan services.


Through AI-powered credit scoring and risk model solutions, banks can extend credit access even to those in rural communities and unbanked population. Unlike traditional scorecards, this technology is more sensitive to real-time indicators of the potential borrower’s creditworthiness, which can include current level of income, employment opportunities, and potential ability to earn. It opens opportunities for both previously unbanked individuals who can now access bank services, and for financial institutions who can now reach more customers.


It is amazing how AI can leapfrog gaps in financial inclusion. And this is just the beginning, as the continued development of AI solutions will further enhance the banking and finance sector and make it more inclusive. These technologies will help shape a future where citizens are financially independent and resilient.


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