7 Ways How AI is Leading the Fintech Industry

AI is revolutionizing the ever-evolving world of Fintech software development. Disruptive technology has influenced diverse roles and responsibilities in the financial and technological sectors.

The groundbreaking amalgamation of AI in the financial software industry has introduced several innovative applications. The global AI market in fintech is estimated to touch a whopping $26.67 billion by 2026, with a CAGR of 23.37% between 2021 and 2026.

The double-digit growth rate and high and promising returns have made AI fintech software development a driving factor in growth and development.

Here are 7 Innovative Ways AI Fintech Software Development is Shaping the Industry

 

1. Fraud Detection

When it comes to handling Fraud, AI plays a crucial role by analyzing large volumes of financial data and detecting unusual patterns. Leveraging machine learning algorithms and natural language processing, AI can help you effectively detect fraudulent transactions in real time. 

For example, banks and other financial institutions can trust predictive analytics to ensure the smooth functioning of fraud detection systems. With predictive analysis, fintech software can ensure greater accuracy in flagging legitimate transactions in online financial services platforms. 

A standard example is Feedzai company, which uses artificial intelligence technology to provide customers with real-time fraud detection and prevention services in daily business processes.

2. Automated Customer Support

One of the most noticeable AI fintech software development solutions is chatbots. Fintech companies are not limited to simple AI chatbots, and research continues toward building highly captivating solutions with human-like conversations that result in customer satisfaction. Some of the leading AI systems chatbot technologies are Siri, Alexa, ChatGPT, etc.

The ChatGPT software is based on the sophisticated AI technology called the “pre-trained transformer language model,” which deploys the standard “reinforcement learning from human feedback” (RLHF) method for enacting human-like interaction capabilities. 

The infographic below depicts the share of global company employees using ChatGPT in work environments.

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3. Virtual Financial Assistants

If you are in the Forex trade, you must be well-aware of the significance of automated virtual assistants and personalized financial advice platforms, which are AI-backed support systems. They play a pivotal role in monitoring stock and bond price trends.

This helps to build well-informed systematic channels for traders that can also be tailored to offer personalized virtual financial analysis. It further leads to specific advisings based on customer portfolios and financial goals.

With the introduction of AI in fintech software development, it has become possible to build robo-advisors that offer innovative trading strategies to stock market novices and experts alike. Moreover, the artificial intelligence possibilities of financial statements are not limited to trading as they can help build accurate, personalized robo advisors for financial organizations. 

4. Risk Management

AI-powered software is viable for building successful risk management strategies. The technology can access a massive range of data for assessing and mitigating financial risks. Well-defined machine learning models are proving beneficial in forecasting market trends, credit risk evaluation, and the likelihood of loan defaults. 

Such strategies help fintech companies make well-informed decisions and minimize potential losses of money laundering scenarios. Many companies are leveraging AI in risk management of financial technology. For example, BlackRock, a quantitative and asset management company, deploys AI and machine learning for risk management in its investment strategies.

5. Credit Scoring

AI Fintech software development solutions can tackle diverse tasks and activities related to credit scoring. For example, you can use this technology to examine credit accounts, cash accounts, and investment accounts, which helps analyze specific clients’ overall financial health situation.

This helps streamline the process and stay tuned to real-time changes in customer data for interpreting their scores. Moreover, it helps process large quantities of customer data for quick and accurate credit analyses. This helps effectively find whether specific consumers qualify for the requested product or services. 

Financial institutions like banks and insurance companies can leverage a large language model (LLM) to analyze and interpret customer data and assess viable risk factors. The best AI software development company can help you create loan and insurance processing software to automate key tasks of the financial sector.

6. Trading and Investment

AI & ML algorithms are proven technological solutions for building trading and investment platforms. They help to create stable platforms for high-frequency trading, portfolio optimization, and more.

The best algorithms can help you analyze massive amounts of data and study viable market trends, which helps ensure maximum return on investments from the platform. For example, QuantConnect is a digital platform offering technological tools and libraries for algorithmic trading in the financial industry.

7. Regulatory Compliances

Implementing regulatory compliances plays a vital role in the Fintech software development industry, and AI plays a crucial role in meeting them. For example, the technology helps meet industry-specific compliances, including monitoring transactions, detecting suspicious activities, and ensuring regular reporting to the concerned regulatory authorities.

Wrapping Up

AI in the Fintech industry provides unparalleled data processing capabilities, which act as a formidable guardian against financial fraud. The technology has helped automate multiple types of tasks across various business categories, helping financial institutions stay ahead in the race for technology and growth. 

At JS Panther, an AI software development company, we have a team of expert developers. Our expert AI team can power your existing solutions with AI capabilities or tailor new ones from scratch.