Artificial intelligence (AI) and Big Data are all the buzz these days. And despite most people automatically connecting them to health technologies, marketing & sales, business analysis and financial services have also started to discover their ubiquitous functionality. Not surprisingly, these are one of the most data-rich sectors and functions.

Big Data is the life-blood of AI, it plays a central scope and impact in AI systems. At the same time data, and the various rules and processes which both enable and regulate access to and use of that data, are critical for disruptive FinTech businesses. Technologists understand that even the most advanced and intelligent algorithms and models are useless without efficient, secure and legal access to detailed, accurate and up-to-date data sets. Accurate and sufficient data is the basis of artificial intelligence and its transformative capabilities for the FinTech industry.

AI – the logical augmentation of the human element

Despite the hype of intelligent machines rendering people obsolete in the FinTech sector, the first applications of AI aren’t replacing humans and human intelligence but rather augmenting them. One of the most common uses promptly became text-based conversational chat as a way to deliver a personal assistant-like experience. Pairing it with AI has allowed businesses to further scale the impact of humans using technology. AI and related technologies are therefore providing an alternative to unintuitive customer support applications, where support agents respond to users through chat windows.

The combination of technologies enable companies to provide services to segments of segments of customers where they were unable to provide high-touch, human service profitably. These include lower net worth segments for personal financial, investment and retirement planning and advisory, where they can now serve using codified knowledge and AI-powered software.

In fact, AI makes customer experiences more personal, providing advice at the transactional level (i.e. every single transaction) that no human assistant could assist with. Because newer technologies are based around behavioural science applied at the individual level, rather than the collective level, they are able to deliver advice and outcomes that are individualized in a way never possible previously.

Automation through AI

Businesses across major sectors are eager to embed artificial intelligence into their processes and services for various reasons.  The use of automation to create efficiency and accuracy in these business processes is, by far, the biggest advantage of AI. Still, it’s important to make the distinction that automation is only a small part of AI altogether as it is about replacing mostly repetitive tasks, with machines. Its combination with Artificial Intelligence, which is about replacing human decision making with more sophisticated technologies, this creates a complex machine learning-based environment, where a variety of inputs can recognize patterns, predict future outcomes and make decisions.

These capabilities of automation and AI make them very attractive technologies for adoption in the FinTech sector. Financial companies are starting to heavily rely on AI to track account activity, and to analyse and understand how account holders are spending, investing and making financial decisions to provide more customized advice and products to their customers.  The use of artificial intelligence allows businesses to continually analyse data and improve investment strategies as well.  AI is even being used for banking customer service. Most recently, RBS has developed Luvo, a technology which helps it customer agents find answers to customer queries. The AI technology can search through a database, but also has a human personality and is built to learn continually and improve over time. The bank is currently evaluating the technology to understand its potential to directly interact with customers.

What AI means for FinTech

At this point, it is obvious that artificial intelligence holds the promise of efficiency, better decision-making, stronger compliance and potentially even more profits for investors. However, the technology is young and in the process of development. As banks and other financial businesses look for ways to lower costs and streamline operations across multiple channels, technology is the most obvious answer. The most logical move is to automate as much decision-making as possible, which explains the number of banks enthusiastically embracing AI and automation.

Of course, an increased reliance on artificial intelligence technologies will come at the reduction in jobs as well as the pressing need for further regulation in the field.  As with every nascent technology, there is a learning curve, so for the time being it makes the most sense for FinTech companies to continue implementing AI in conjunction with staff.  While we live in the digital age of AI, we’re still a few steps away from completely removing the human element from the equation.