We are well aware that FinTech has greatly advanced during these couple of years, especially with AI applications that opened doors to financial services. Taking a closer look, we find that technology not only helps the business sector but has enhanced the quality of life. How much has AI supported the financial sector and society and what are the benefits? Let’s find out.
AI for microloan: Retail lending for everyone
Undeniably, AI produced new solutions for problems in the financial sector and a problem that once affected many is access to funds. Initially, some people lacked the opportunity to advance businesses and lessen their financial burden because traditional credit scoring couldn’t provide the risk assessment. This problem prevailed despite the fact that they have good financial behavior and were capable of paying loans.
As a result, the AI credit scoring solution below will surely enhance the lives of many.
- Credit scoring from new forms of data. In fact, the concept of using the borrower’s social data such as social media posts have long been used in credit scoring. This method suits low-income clients or those with no financial history. However, the amount of these data is massive, and it is beyond a human’s capacity to qualitatively analyze them. With the use of AI that can process data both qualitatively and quantitatively, this solution becomes feasible. At present, Chinese financial service provider, Ant Financial, is experimenting on this solution by offering microloan via the e-commerce platform.
- Access to the mass. Another significant feature is that AI is a software that can be copied, shared, and promptly operate. As a result, we can distribute AI solutions to other types of services, and this includes services on the internet with space and time limits. Aside from easy access, AI can simultaneously evaluate the requests of many users. Thus, it becomes a financial inclusion solution which gives more people access to funds.
Increasing the number of people who can access funds not only helps banks gain new clients but gives borrowers access to the funds that can uplift lives in terms of their daily consumption and further business investments. These opportunities play a part in solidifying the overall economy and society.
Security: A top issue that AI can help
Financial technology resulted in more and more transactions that speed up each passing day. What follows is security issues which require error prevention, so that the majority of users are not affected. Here, AI can play a vital role and some applications that uplift financial security are listed below:
- Precise identity verification with AI. One of the dangers in the financial sector is “spoofing” wherein fake identity is used to withdraw assets or perform illegal transactions. Today, as transactions are rather fast, a single error is difficult to undo. This resulted in the idea to use AI in the verification solution. An example is the face recognition technology that uses AI for precise verification. Not only is it convenient but verified transactions with technology can also lessen the chance of data leakage.
- Monitor and inhibit fraud. As transactions multiply, the chance of fraud also increases. Although there are experts in the field, they surely can’t keep track at all times. However, with AI, they have the ability to quickly track abnormalities without resting. They begin by learning the patterns from massive transactions to find probabilities until they can suggest which transaction may be a fraud. Afterward, they can inform related parties to halt the transaction and inhibit the fraud.
The use of AI to uplift security will vastly lessen risks in the financial sector. Thus, they are an essential element that will help FinTech provide a better living.
AI replace human so the human can develop
Advanced technology not only ignited new products and services, but tech applications can help business operations in many ways. A trending application is an automated system that doesn’t require human work. These are working positions wherein human won’t utilize their full capacity if they are positioned in such areas.
Using human for routine work without nurturing their skills may give them income. However, in the long run, the lack of skill development will destroy their chance to gain stability in life. If AI is replaced in these positions while the human is encouraged to work in areas with skill development and human interaction, this will sustainably enhance their quality of life.
In the financial sector, several tasks can be replaced by AI or robots. This is especially true for operational tasks with document or registration works. Moreover, many positions can only be accomplished by human capabilities especially the ones regarding interaction with clients. A talented employee in this position will provide a greatly different experience.
As seen above, aside from the buzz about benefiting the business sector, FinTech can also play a social part for short term results such as providing security. Also, this extends to long term results in career and economic stability. We have more stories about AI and FinTech, follow us for more updates.