Artificial intelligence (AI) shook the financial service industry like a raging storm and it’s been experiencing a swift transformation ever since. This is why prominent management consulting firms like McKinsey have collectively forecasted that AI has the potential to contribute over $4.4 trillion dollars in additional corporate profits per year. 

The impact of AI is felt across a wide range of financial solutions, which include insurance, trading, risk management, and more. For this reason, it’s being leveraged to automate processes, unveil important insights and improve customer experiences. Let’s find out how AI is reshaping both fintech and the finance industry.

With AI carrying out high-volume, repetitive tasks, it enables financial institutions to operate with heightened efficiency and effectiveness.

Since AI crept into the financial sector, its greatest impact has been felt in its potential for cost savings. This has prompted McKinsey’s assessment to ascertain its significance and it was reported that the implementation of AI could translate into annual savings of up to $450 billion by enhancing fraud detection and risk management capabilities as well as adjusting front and back office processes for banks.

Specific AI applications that have led to major efficiency gains include:

- Automated handling of routine transactions such as trades and claims.
- Chatbots that efficiently manage common customer service inquiries.
- AI-powered systems fortifying fraud detection and anti-money laundering monitoring.

Taking a walk away from the cost-saving potential of AI, it has also created different opportunities to generate revenue for the fintech and finance sectors. 

Some examples of AI leading to new monetizable products and services include:

- Tailored financial advisory platforms.

- Automated wealth management services.

- Customised insurance products derived from AI-driven risk assessments.

- AI-optimised trading and investment strategies.

AI can match consumers with financial products in a manner that exceeds previous capabilities, this is achieved by harnessing vast datasets and advanced algorithms, thereby opening up new opportunities for revenue generation.

With AI on board, financial operations have relatively become seamless enabling companies to enhance their service delivery across various platforms. This, in turn, fosters customer acquisition, retention, and overall satisfaction.

Customer experiences have greatly improved since financial institutions incorporated AI into their services. For instance, chatbots are capable of delivering round-the-clock support and guidance, while AI-driven recommendations accelerate the process of helping customers discover suitable products.

Customer experience benefits include:

- Expedited service through automated onboarding and underwriting procedures.
- Personalised financial recommendations that cater to the unique needs of individual users.
- Proactive surveillance for fraud, preventing account disruptions.

The rate at which AI is impacting various finance sectors is stunning, and numerous applications keep emerging:

In Banking:

- Utilising predictive analytics to enhance credit underwriting.
- Employing intelligent virtual assistants for improved customer service.
- Implementing automated systems for fraud monitoring
and combating money laundering.
- Streamlining processes through automation, covering tasks related to loans, payments, and compliance.

In Insurance:

- Automating the claims processing workflow for efficiency.
- Offering personalised policy pricing and recommendations through AI-driven insights.
- Enhancing customer support with the aid of AI-powered chatbots.
- Bolstering security measures with fraud detection and cybersecurity analytics.

In Trading:

- Leveraging algorithmic high-frequency trading strategies for optimised trading activities.
- Harnessing predictive analytics to inform investment decisions.
- Automating back-office trade processing to enhance operational efficiency.
- Ensuring compliance and vigilance against fraud through advanced surveillance.

AI applications in the FinTech and Finance sector are ever-evolving. This is why many financial institutions are already increasing headcount significantly in AI-related projects. 

The future of AI in Finance has already arrived: as such, projections indicate that global revenues from AI in Fintech and Finance are expected to rise to $61.3 billion by 2031, exhibiting an impressive CAGR of nearly 23% from 2022 onwards.

It’s obvious that as AI capabilities advance, an increasing number of financial institutions will harness its benefits like lower costs, enriched customer experiences, and new product opportunities. Nonetheless, those who choose not to embrace AI run the risk of lagging behind their competitors.

Our team of experts stands ready to assist in communicating your business strategies to prospects and customers. We collaborate closely with financial industry leaders to craft custom whitepapers that outline AI adoption strategies.

Do you want to learn more about how whitepapers can significantly benefit your business? If yes, contact us today, to use our expertise in developing strategic whitepapers crafted to deliver results.