AI & IoT are already having a huge impact in financial services
Artificial intelligence has been around for quite a while now but both interest and development in the field have increased exponentially in the past decade. Computational costs have decreased allowing for more and more powerful computers being made. These machines do not lack the hardware and processing power to correctly perform intelligent decisions based on collected data.
Artificial intelligence is the future, revolutionizing our lifestyle and the way we do even the simplest of tasks. At the same time, IoT is gaining popularity rapidly and it will inevitably come to rely on artificial intelligence. The data collected through the interlinking of all computational devices around us is too vast for manipulation by humans but is easily comprehended and evaluated by a computer to make the best use of it. Both these phenomena are set to shape and change the future by impacting not only our lives but also every industry vertical. One in partcular that is likely to benefit massively is financial services.
The Internet of Things is no longer just a concept. Manufacturers have released products designed to work with each other and are also working on interoperability between devices from different vendors because only then will a smooth and useful experience be provided to the user. These intelligent devices will integrate seamlessly into our lifestyle and their interconnection with each other is what will make them have a huge impact on our financial lives. Insurance, healthcare, and banking will benefit the most from this and provide better and more options for using IoT with advanced financial products and services.
Personalized Financial Services
Automated financial advisors make use of AI to assist the user in handling and making decisions related to their financial issues. These roboadvisors monitor the user’s financial goals and stock prices to offer suggestions on which stocks or bonds to buy or sell. AI applications installed and working in user devices analyze huge amounts of data to offer relevant financial advice and forecasts.
Smart wallets use AI to learn user’s habits and needs and warn them about their expenditures so they can practice restraint.
Smart devices are in use today that monitor all aspects of a person’s health. With the evolution of IoT, these devices will only become more intelligent and able. Monitoring data from these devices will allow for monitoring the user’s health and act in situations where intervention may be necessary. This process will also allow health insurance companies to be better prepared in advance and prevent and cure diseases at an early stage before they become chronic. Not only will this lead to reduced costs for both patients and the healthcare companies it will also help dynamic pricing in insurance premiums based on the record of a person’s health and fitness.
Internet of Things will allow insurance companies to monitor drivers and their vehicles to record miles driven, driver habits, changes in speed and the time of the day they drive to calculate and assess risk levels. This will deliver better premium rates for users who drive well.
Even today home insurance companies are encouraging customers to install devices that monitor their property by providing incentives. Intelligent tracking devices can be used to warn of potential danger, track water leaks, carbon monoxide levels, and smoke to detect and warn in case of a fire. Analytics based on IoT data can be used to predict future events like weather patterns in a certain geographical area. Insurance companies are also employing drones to assess the amount of damage in the case of an incident. All this will allow for better pricing for both service providers and consumers.
IoT in Banking
Customers will be able to make transactions and inquiries using different devices. Banks will be able to collect information and monitor behavior patterns to provide better and sound financial advice and services.
These are just some of the aspects of our financial lives affected by IoT. Use of sensors and data from IoT devices will allow banks to provide more personalized banking and financial services. For example, banks can monitor a user’s business and its growth to ensure the loan is returned on time. All this data from thousands of customers coming into the bank’s system is impossible to be managed by humans however and cannot be put to meaningful use without employing serious computational power to deduce and predict behaviors and trends. For this purpose, computers will organize and collect this data and employ artificial intelligence to make the most of it. The Internet of Things cannot offer its maximum benefits without artificial intelligence.
The decrease in computational and data storage costs have made making AI systems and applications more practical. With computers being a major part of our lives, we are today making the most of the mobile devices, wearables, and the Internet. The data from our use of all these devices can be used by AI programs so they can operate at the maximum performance level. AI is being employed by different industries everywhere to provide a better and more personalized experience for their users. An example is chat bots. These same AI systems can also be used in the finance sector by banks and other service providers to predict business growth, etc. and track user’s behaviors and characteristics to cater their ever-changing financial needs.
Fighting Fraud and Crime
Monitored user behavior patterns allow AI tools to notice anomalies and irregular behavior quickly to apply countermeasures and notify the users in case of fraud attempts. Such tools are also capable of collecting the necessary evidence needed for the conviction of the criminals making these attempts.
Companies can make use of AI computing to perform analysis of behaviors and trends to offer better and advanced insight that will be useful to their business. For example, firms can use AI to go through thousands of pages of tax information to collect relevant data that may be needed.
Use of Bots
Chatbots are being used by different financial service providing companies and banks to communicate with their customers and meet their needs. These bots are a valuable way of fetching information, providing answers and offering personalization. Customers regularly use Bank Bots to get information about their accounts and make payments. Robo advisors offer meaningful advice and recommendations to each client based on their needs and portfolio.
In short, AI is being currently applied to offer both substantive and personalized services to users as well as to process huge amounts of data to correctly predict business growth, future finance trends and changes as well as to formulate effective banking strategies. It is allowing for better, faster and cheaper decision making and productive changes to systems to get better customer satisfaction.
IoT and AI both are progressing rapidly and it is more than probable that soon everything we do on any digital device could be connected with all the other digital devices in our use. Currently, most of the financial service providers are limited by resources, budgets, regulations or operations. However, studies show that by 2025 robotics and machine intelligence will be a vital part of our daily lives and this will have great implications for every industry.
Yet a major concern is privacy. With this much information flow and systems relying on digital devices and information through them the users’ privacy will have to be taken care of. Intelligent systems will need to identify cases of manipulation or fraud as a result of a crime. Otherwise, all anyone has to do is fool the banking and insurance intelligent systems by tampering with the connected devices or impersonating the account holder. A BBC reporter recently proved HSBC’s current voice-recognition security isn’t as he impersonated his brother to get access to his account.
Combined, AI and IoT together can thoroughly revolutionize the finance industry and how services are provided to customers but this can only be achieved if banks and insurers cooperate by preparing employees to create products and services that integrate with smart devices. Visa recently announced it’s expanding its VisaReady program to include IoT devices. “More and more, consumers are relying on smart appliances and connected devices to make their lives easier,” said their EVP of innovation and partnerships, Jim McCarthy in a statement.
By adding payments to these devices, we are turning virtually any Internet connection into a commerce experience – making secure payments seamless, and ultimately more accessible, to merchants and consumers.
A noble aim. The shift to all things digital may be costly at the start but it is the way to go and this time the change will not be stopped due to lack of resources or operational means. The substantial benefits of integrating IoT and AI into our lives and work are numerous and therefore there is no turning back from this. There will be an increase in automated financial services that employ Artificial Intelligence along with Internet of Things in the future. Although this will give rise to rise to security and privacy issues as well, these will eventually be effectively dealt with.