The use of artificial intelligence is increasing in many industries including the financial industry. At the heart of artificial intelligence is machine learning algorithm which is software that improves when it is given more data. There are a number of ways that the financial industry is looking to utilize this machine learning and it could change the way that the industry operates in the future.
Used For Fraud Detection
Fraud is something that has always been around, but online fraud is proving harder to fight. Financial institutes find that declining transactions too aggressively only leads to a loss of customers and billions in losses. This is where artificial intelligence will come in handy and is already being tested by major financial institutes.
Machine learning algorithms will be able to detect fraudulent transactions which would be overlooked by human analysts. This will improve the accuracy of transaction approvals and reduce the false declines that can happen. This will be achieved by these algorithms learning the patterns of transactions for each person and determining if the new transaction is in line with this. This is actually something that Mastercard is already looking at with the Decision Intelligence technology that it has launched.
Over the years, chatbots which are powered by natural language processing and machine learning have become a powerful tool. They can offer a conversational and personalized experience to users in many different domains. In the financial industry, these chatbots could be used to help people manage their savings and money.
Plum is an example of this already in use as it is a chatbot that you can access via Facebook Messenger. The chatbot will help you save money in small bits. When you register, you will connect the AI to your bank account and it will analyze your account to see how much you can save.
Banks have also been looking at AI chatbots to improve their self-service interfaces. The Bank of America is looking to launch their AI chatbot Erica which will be accessible through the mobile app. The chatbot will help users make smarter and faster decisions. Users will also be able to command the chatbot to make payments for them.
Crunching numbers is something that computers have always been good at and which can easily be used in the financial industry. With the advances in machine learning, computers will now be able to take on the complexities and subtleties of tasks such as trading stocks and forex. There are a number of hedge funds who are looking into this and have some results from this.
Sentient Technologies runs a hedge fund and was able to develop a machine learning algorithm that ingests millions of data points. These data points will be used to determine trading patterns and create trend forecasts. The company was able to use this algorithm to fit 1800 days of trading into a few minutes and open up traders to other tasks. This could revolutionize the way that stocks and other trading are completed.