Artificial intelligence is fundamentally changing the way people interact with money. Everyone can benefit from the application of this technology. Not only financial institutions but also bank customers and investors. Fintech shows a strong appetite for adopting the latest artificial intelligence technologies, with applications from quantitative trading to fraud detection, from credit management to audit and compliance. Different fintech companies have demonstrated a solid propensity to adopt the latest artificial intelligence technologies, with applications from quantitative trading to fraud detection, from credit management the audit and compliance. Fintech, short for financial technology, refers to using technology to improve and automate financial services. This can include various applications and technologies, such as mobile banking applications, online payment platforms, and artificial intelligence-based investment advice.
We need the AI-powered Fintech
Fintech aims to make financial services more efficient, accessible, and user-friendly. Artificial intelligence and machine learning (AI) are increasingly being used in the fintech sector because they can potentially improve the efficiency and accuracy of financial services. Some of the main ways AI and machine learning are being used in the fintech sector are, for example, process automation. AI and machine learning can automate repetitive tasks and processes, such as data entry and analysis. This can reduce the amount of time and effort required to complete such tasks, as well as reduce the risk of errors.
Or to improve decision-making. Artificial intelligence and machine learning can also be used to make more accurate predictions and decisions. For example, machine learning algorithms can be trained on large data sets to identify patterns and trends that can be used to make more informed decisions on things like credit risk or fraud detection.
Artificial intelligence and machine learning can enhance the customer experience by providing personalized recommendations and advice. For example, AI-powered chatbots can provide customers with immediate answers to their questions, while machine learning algorithms can provide personalized investment recommendations.
Improving transparency in Fintech
Overall, the use of AI and machine learning in the fintech sector has the potential to improve the efficiency and accuracy of financial services and can also help improve the customer experience. Artificial intelligence in Finance raises ethical questions, particularly relevant ones such as transparency, accountability, and bias. One of the main ways in which fintech promotes financial inclusion is by making financial services more accessible to underserved communities. For example, by offering mobile banking services. Fintech companies can make it easier for people living in remote or rural areas to access financial services, such as transferring money or paying bills. This can be especially important for people who do not have access to traditional (“unbanked”) banks.
In addition, fintech companies, through artificial intelligence, can also offer “personalized” financial products and services tailored to the specific needs of underserved communities, such as micro-loans or savings accounts with low minimum balances. This can help empower individuals and families to take control of their finances and improve their economic well-being.
Humans are always at the centre
In this sense, combining advanced technological infrastructure, a highly educated workforce, and a strong culture of innovation will facilitate consumers’ and businesses’ rapid adoption of fintech solutions. All thanks to the combined use of technologies such as Blockchain (DLTs), IoT (Internet of Things), AI and machine learning, along with the recently enacted Artificial Intelligence Regulation (AI Act), which can cope with any abuse or reckless use of the technology under discussion. Artificial Intelligence is set to significantly impact the financial sector, particularly the Fintech sector, greatly increasing the benefits of using the technology component and, consequently, the audience of users (unbanked people). Fintech will have a significant impact on society, both in terms of how financial services are delivered and in terms of the broader economy. To this must be added the business of digital payments and money transfers.
Fintech has already significantly impacted how people make payments and money transfers, and this trend is set to continue (e.g., mobile banking and peer-to-peer payment platforms). And finally, blockchain and cryptocurrencies. Blockchain technology and cryptocurrencies have the potential to revolutionize the financial sector, and we can expect to see more innovations in this area in the coming years.
We need to reduce the risk
Blockchain technology is set to impact the financial sector globally. In its architecture, it is poised to enable faster and more convenient processing of financial transactions. Supply Chain Finance, for example, is one of the most revolutionary tools available to the financial industry, especially fintech. Its main contribution is to simplify the integration of physical and financial flows. This is due to Blockchain technology, IoT, process automation, and leveraging artificial intelligence (AI) and Big Data Analytics. In addition, these technologies can help reduce many financial risks of the better-known supply chain. Among these, we can find operational risks, such as double financing or not getting the desired output.
Established technologies no longer emerging
Therefore, financial institutions and experts must understand the role of disruptive technologies to take advantage of this economic revolution. The creation of a digital ecosystem through eIDAS refers to a range of services, including verifying the identity of individuals through AI tools and online businesses and verifying the authenticity of electronic documents. The eIDAS regulation is Regulation (EU) 910/2014 on electronic identification and trust services for electronic transactions in the internal market. This regulation defines the conditions under which member states will recognize the electronic identification of users.
In addition, this regulation implements standards for electronic signatures, time stamps, electronic seals, and other evidence of authentication, including electronic certification and registered delivery services that give electronic transactions the same legal status as paper-based transactions. The client-institution relationship is set to change dramatically. Paradoxically, it will be more inclusive and destined to be even more personalized. In other words, the introduction of artificial intelligence and machine learning will tend to replace human activity in what are repetitive and/or redundant activities (transactions), so to speak.
More value to relationship capabilities
These latter low-value activities will subsequently focus on analytics and due diligence, again supported by the use of AI. Money is, moreover, destined to have a totally different function from the past, especially with the advent of cryptocurrencies (cryptocurrencies) and the probable introduction of the CBDC (Central Bank Digital Currency) or Digital Euro, starting presumably in 2026, which the intentions of the ECBs, will go alongside and not already replace money (fiat currency). Implementing new technologies will lead us toward a more straightforward, more linear, and sustainable world. It will enable people to live their lives differently and paradoxically more inclusively, minimizing bureaucratic and regulatory implications in a more or less revolutionary way.
