Autonomous finance can be defined as algorithm-driven financial services that make decisions or take action on a customer’s behalf.
Artificial intelligence (AI) applied to financial processes can reduce costs, increase efficiency and transform a company’s cash management strategy. The financial sector was one of the pioneers in implementing financial technology (or fintech), such as artificial intelligence (AI), and its fame continues to grow among financial institutions. AI and machine learning (ML) tools sit at the top of the ranking as the most disruptive technologies in financial services.
Artificial intelligence is capable of automating tasks, increasing the efficiency of processes, and uses machine learning, deep learning, predictive analytics and natural language processing to create more powerful features, such as chatbots and automated advisors. According to the Business Insider report, 80% of banks are aware of the benefits of AI for financial institutions.
Adding artificial intelligence to their fintech arsenal helps banks and financial institutions optimize their customer experience, reduce costs and increase revenue.
How do banks and financial institutions use AI?
These are some of the applications of AI for financial services that can add value to customers while reducing costs in banking and financial services:
Intelligent automation to reduce costs and time
Automating routine tasks saves costs and time for financial institutions while minimizing errors and collecting data. According to experts, 66% of financial industry leaders expect to focus even more on automation in the rest of 2022. Artificial intelligence software can be applied to different financial operations and processes such as these:
AI applied to expense management: An AI solution is capable of reading receipts and distributing them by category based on lists of expense types or authorized vendors that have been previously uploaded to the system. It is still necessary for workers to review the expenses that it rejects.
AI applied to accountancy management: Artificial intelligence is capable of extracting and compiling PDF invoice data, allowing teams to focus on more complex tasks.
AI applied to regulatory compliance: AI-powered tools are able to analyze documents, using natural language processing and machine learning, to look for specific terms that denote compliance with standard regulations, such as GDPR. Process automation using artificial intelligence does not replace the work of workers, but rather reduces the time spent on repetitive items and offers them the opportunity to focus on more complicated tasks.
Predictive analytics to make informed decisions
Most finance teams spend almost half of their time gathering information and testing it to generate reports and calculate predictions. Artificial intelligence is capable of saving teams time, generating reliable predictions and reducing the chances of errors.
For example, artificial intelligence and machine learning can predict customer payment patterns. If a client is considered to be paying late due to their behaviour on previous occasions, the company can remind them of the pending payment more in advance than is necessary for those clients who usually pay on time. This is known as a machine learning-enhanced accounts payable process.
Personalization of the customer experience
Through the use of artificial intelligence, financial institutions can obtain truly valuable information on customer satisfaction and personalize their experience. For example, instead of relying solely on a person’s credit score, through solutions powered by artificial intelligence, banks can take into account other factors in their financial history, such as repayment patterns or the amount of credit they have. This information can be used to personalize the customer’s interest rate.
Artificial intelligence also helps clients manage their portfolios more effectively. They can do it through automated advisors or digital capital management, two possibilities that are experiencing a real boom. To illustrate, Italian fintech company Axyon AI, is using deep learning to create investment strategies, allocate assets, and identify inconsistencies in the market.
As AI and automation capabilities grow, so will the opportunities to continually improve the customer experience. The real ability of AI is to understand customers’ individual goals, spending habits, and financial risk comfort levels will remove difficult decision points for customers while maximizing their financial performance.