AI's Role in Finance: Exploring the Impact of AI in Fintech in 2024
Fintech Design
February 1, 2024
5 mins read

‍What is AI in Fintech?

AI in Fintech
brainstorming session on the importance of AI

AI has been a facilitator of financial industry uplifting. Regulating automation & increase productivity of fintech startups is essential. AI in Fintech is beneficial for fraud detection, predictive analytics for Risk Management, Smart Payments, & Insurance underwriting by AI.

Automated AI is changing various industries like marketing, B2B, content creation, finance, insurance, & many more to get 10x extra growth. This lead to 80% improvement in accuracy.

Other benefits:

Know your customer ( KYC) with AI, Automated Trading strategies, Payments, credit scoring, Financial reporting, data analysis, AI-algorithm & loan prediction.

How AI is used in Fintech?

AI in Fintech is growing at a CAGR of 2.91% (2023-28) & is anticipated to reach $49.43 billion by 2028.

North America is the leading market for AI in the finance industry because they are excellent in AI software & system development.

Banking & finance includes 20-25% rate of the global economy. AI in creating customer actions smarter, Intelligent process automation for front & back end operations.

5 Ways AI is implemented in Fintech.

1. AI-driven engagement & customer experience.

AI in Fintech
improved customer experience due to AI

AI enabled system to analyze customer data to get behaviors & understand unique customer specification. If you’re planning to take up advice with experts in finance but didn’t have links in the industry. AI is your friend now.

AI powered chatbots & financial decisions foster business growth. They give personalized customer supports, manage routine inquiries, product managing, & account management for fintech.

2. Fraud detection for fintech.

AI in Fintech
fraud detection got easier

AI-powered payments & fintech gives fraud detection efforts to get the guarded system.

Businesses are about to save $10.4 billion by 2027 with the use of AI-enabled fraud detection. It uses to analyze real time data & potential security threads.

AI-algorithm works in risk assessment by studying historical data for better recommendation & report based insights.

3. Predictive analytics for investment & studying market trends.

AI in Fintech
analyzing market trends with AI

AI-powered fintech startup is eligible to perform high-frequency trading, investment plan development, & portfolio management. This feature can reduce risk & maximize ROI.

Credit scoring is a for those with less credit history, AI-enabled models will find out person's credit level. 

4. Efficient regulatory compliance.

AI supports financial services in managing monitoring transfer, reporting to authorities, & analyzing uncertain activities.

AI in Fintech
safety measues to be taken care of

AI-algorithm can handle KYC ( Know your customer ) & anti-money laundering ( AML).

Predictive forecasting for scenario analysis, budgeting, & data collection. Virtual personal financial advisor is for cost-effectiveness & better future conditions.

Individuals goals & risk tolerance for better financial feedback.

5. Uplifting customer experience.

AI in Fintech
customer experience getting better

AI-powered advisors will give tailoring recommendation by adapting customer's unique needs. Chatbots are live round the clock to resolve customer feedback.

Data centric advice give customer-centric products & uplifts marketing strategies for business growth. On your mobile, a payment app can make a lot of difference

How many Fintech companies use AI?

  1.  Feedzai : Fraud detection & financial advice to regulate safe financial management.
  2. Betterment : Investment advice & portfolio analysis for future safeguard.
  3. Allybank: AI chatbot for financial advice & TATA Bank uses this technique to makre their customer satisfied.
  4. Kabbage: AI-enabled risk management & best investment strategies.
  5. Blackrock: Risk & Asset Management for Companies asking for financial guidance.
  6. Robinhood: AI for commission free investment.
  7. Upstart: AI for credit scoring & online lending for better loan system. This is an easy way to ask for money.
  8. Kount: AI-enabled risk mitigation with the help of predictive analytics. 
  9. Affirm: AI-powered credit scoring & loan distribution idea.
  10. Plaid: AI-enabled financial data for seamless integration with fintech apps.

AI in Fintech
AI in Fintech

How AI will shape the fintech industry in 2024.

  • Market is expanding with the help of Ai in fintech enhanced market research, market trend analysis, & customer research for business growth in the minimal risk.
  • This will help finances & banking sector to open in new locations.
  • New Innovation in products & serviceable businesses. To better fit customer demand for business growth.
  • Automatic process for enhanced decision-making analysis AI-system prevents human errors & give rise to better business conditions.
  • AI-enabled personal finance advisor like Cleo & Erica in the market.
  • Accurate predictions & analysis to get proper guidance.
  • Lower cost of running finance related company by preventing risk.
  • Efficiency in customer experience by analyzing spending & income levels.
  • Paypal & Mastercard apply AI/ML in fraud detection activities. This will be adapted by other new fintech startups.

AI in Fintech
AI is changing the shape of Fintech Industry

Fintech apps needs to be engaging, customer-centric, private, & on point to get the right audience. 

For that, you need an experienced force of App developers & designers to grow your fintech startups with 10x speed. 

AI in fintech can be challenging if not implemented correctly. This can arise data security issues, lay-offs in IT sector because of AI playing the role.

 

So, If you’re launching a fintech, take care of other things in the market persisting.

Use cases in AI Driven Fintech ( 2024)

  1. Robotic support: These systems handle tolerance, risk mitigation, & investment plans for portfolio management.
  2. Biometric privacy: This will help keep your system private with facial recognition, voice recognition, & fingerprint sensing.
  3. Insurance support: AI powered system to mitigate risk & personalized policy recommendation. This lead to manage risk & claim settlement.
  4. Customer analysis: This will help understand the market trends & your target audience for better business growth.

AI n Fintech

Advantages of AI in Fintech, 2024.

  1. Credit scoring : Leverage Data sources & use of AI in the credit scoring by leveraging data history for credit making. Giving loan to people is necessary when they are in need of it without focusing on their credit history level.
  2. Market Efficiency & Algorithm Trading: Analyze market data, collect insights, & execute proper plans. As giving the right strategy is necessary.
  3. Enhanced UX & personalized financial support for customers using a particular app for managing finances. Robotic advisors give recommendation after collecting insights.
  4. Predictive analysis for Insurance tech: Suggests risk reduction, risk reduction, & competitive advantage.
  5. AI driven cost saving & resource optimization support: AI & ML will redefine predictive models which are capable of handling complex conditions.
  6. Insights from customer & market data: Fintech will dive into a wider range of data sources to understand risk & user requires. This will help businesses/customers with deeper view.
  7. Cost Saving: AI manages extra expanses, fraud detection, risk mitigation, & scratch card feature to increase interest in customers. This will save money in various ways. 

Fintech niches to check on in 2024:

  1. Digital Banking: Traditional banking firms are going towards digital options as Neo Banks give low interest rate, extra transparency, & low fees. AI in baking sector created business value of $60 billion by 2030.
  2. Reg tech is cutting unnecessary paperwork as its time-wasting & automated compliance software can settle investment.
  3. Payments support: Easy transfer of money is necessary when moving out for shopping now days.

Positive impact on AI in Fintech.

Accessibility: Robotic advisors & Digit banks are open to multi nations & have wide range of customer base.

Personal financial management: Before only a rick can afford a financial advisor now a smartphone user can track bills, analyze market, & invest in opportunities.

86% of financial service regulator find AI to be crucial for business success.

Risk Prevention as a service ( FaaS) : 34% users observed financial fraud after 2020. So, Fintech founders invested in Fraud Management System which uses AI/ML models uses predictive analytics to mitigate fraud for safe future & better financial position.

Few Challenges of AI in Fintech;

  1. Data Challenges.
  2. AI bias.

Features of AI In Fintech industry:

  1. Robotic Process Automation ( RPA): In Fintech & Banking, handling complexity is necessary. These companies can leverage process automation to support back end operations with the help of smart chatbots. JPMorgan Chase has COIN as an RPA which has completed 360,000 hours of finance work in less time. You can automate Trade Finance operations, Security checks, credit cards, mortgage handling, & customer onboarding. 
  2. Voice powered payments : 80% of users are happy with voice shopping experience & managing voice payments by making it conversational & very personalized. This will enable fruitful conversation, more revenue, & high-quality business.
  3. User Interface for exception experience: Consider environmental, social, and governance functions across investors which facilitates stable investment criteria. 
  4. Data Privacy & Cybersecurity: It gives protective strategies to safeguard payments by launching multifactor authentication & standard encryption techniques for safe experience while using.
  5. AI in risk is used to monitor data & making real time decisions with analytics. This will provide ris
  6. Fintech is getting fused with Insurtech & Regtech. AI increases the value of that software in the market because that's increasing customer engagement.

Top 12 Fintech companies in India.

  1. Paytm: Founded by Vijay Shekhar Sharma in 2000 is providing Customer with payment support, bank lending, & Paytm QR Code. IT provides event booking, mobile recharge, bill payments, & provides small business commerce. Introduces digital payments in India with the help of e-wallets which is flawless.
  2. Lending Kart: One of the first lending platform which uses AI & ML. Supporting individuals with low credit score to qualify for loans. This company make use of Big data analytics to mitigate risk, clears loan, & detect fraud. 
  3. Instamojo: It's a full stack payment app for small businesses to collect money online with ease. Now you can sell with your own website & payment getaway. You can s
  4. Razorpay: Its an online versatile payment solution with features like credit & debit card, net banking, UPI, and more for easy management of money via mobile. Razor pay launched new products like invoicing, Subscription, smart collect, route, & more.
  5. Pinelabs: This provided pioneer card based payment & it gives payments solutions to merchants. Launched in 2012 as a cloud based, POS, & intelligent app to grow commerce in the country.
  6.  Zest Money: This app is used to take up loans by using mobile tech, AI, & digital banking. It provides loan without any credit history & obtains a risk profile for each user. AI powered decision engines decides credibility & gives money.
  7. PolicyBazaar: Best app in Insurance domain & experienced rapid growth by managing policy cancellation. It helps small business owners compare financial products, policy renewal, & claim handling.
  8. Acko: Mainly in the motor insurance. They advise people on taking the right product. Acko transformed car insurance with digital model & they serve financial support against medical uncertainty.
  9. Zerodha: Operating in the finance management domain & it provides an app to invest in stocks, mutual funds which is commission free, IOPs, government securities, & gold bonds.
  10. Unnati: This one is the top-notch Agri-fintech company & this bringing smoothness to farming. They support farmers in every stage of crop lifestyle. Other services include : Advisory, Insights for yields, Financial care, serving better deals.
  11. CRED: Founded in 2018 for Reward-enabled payment for credit card bills. Serves real-time analysis, home loans calculation, PPFs, EMIs, & you can earn cred coins.
  12. Niyo: Digital Platform for Wealth management, offers saving option, & has in-built Robo-advisory for mutual fund + financial management. 

As per Forbes, Biggest Fintech startups of 2024 are Revolut, Bolt, Stripe INC, Good leap, Rapyd, Brex inc, Chime, & Checkout. 

Conclusion.

As you know, fintech is the better innovation & 2024 is welcoming a better place for SaaS startups in India. As Digital Finance is growing at a fast pace at a CAGR of 30% from 19-20 & is expected to reach by $10 Billion by 2025.

Financial support is needed in businesses, on a personal level, & on a micro-small business level. If you’re planning to launch your next tech in 2024 Alien design team is here to create your app as you want.

Alien will provide quality app UI UX design as per 2024 standards for revolutionary fintech startups. If you’re planning to build your startup in any of the domain like Ecommerce, retail, SaaS, healthcare, & real estate. We’re here to listen to your demands & implement them in the real world. 

Our strategies will uplift the web flow, represent skillfulness, & give your app a unique level that you thought for your startup.

Just great work can make your business, firm, enterprise, & venture a big success in the market if you know your worth.

Contact us & we’ll handle your design & business online presence with UI UX techniques.

Currently documenting the journey of building a Product | Co-founder at Alien. I am passionate about the creative field, which led me to initiate my journey into business with a focus on digital products. Beyond my professional pursuits, I find solace in traveling and taking breaks from city life, often indulging in trekking adventures.

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FAQ

What is AI in Fintech and why is it important?

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AI in Fintech refers to the integration of artificial intelligence technologies in the financial industry to automate processes, increase productivity, and enhance decision-making. It plays a crucial role in fraud detection, risk management, smart payments, and insurance underwriting. AI facilitates better customer experiences, personalized financial advice, and efficient regulatory compliance.

How is AI utilized in Fintech applications?

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AI is utilized in Fintech for various purposes such as fraud detection, predictive analytics for risk management, smart payments, and insurance underwriting. It analyzes customer data, facilitates personalized customer support through chatbots, and automates routine inquiries and account management tasks.

What are some key ways AI is implemented in Fintech?

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AI is implemented in Fintech through AI-driven engagement and customer experience enhancements, fraud detection, predictive analytics for investment and market trend analysis, efficient regulatory compliance, and uplifting customer experience through personalized recommendations and tailored financial advice.

How many Fintech companies currently leverage AI technology?

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Several Fintech companies leverage AI technology to enhance their offerings and services. Examples include Feedzai for fraud detection, Betterment for investment advice, Allybank for AI chatbot support, Kabbage for risk management, Blackrock for asset management, Robinhood for commission-free investment, and Affirm for credit scoring.

How will AI shape the Fintech industry in 2024?

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In 2024, AI is expected to significantly impact the Fintech industry by expanding market research capabilities, enabling innovation in products and services, automating decision-making processes, improving customer experiences, and enhancing risk management and fraud detection measures. AI will drive efficiency, cost savings, and resource optimization in Fintech companies, leading to broader accessibility and better financial management options for users.