4 Ways in Which AI is Transforming Fintech

Karthik Subramanian

AI applications can process huge datasets and execute low-level automated tasks. As a result, they’re increasingly finding their way into different business applications. The financial sector is perfectly suited for AI adoption, thanks to its wide variety of data sets and the need for intelligent automation.

Business Intelligence in Forex

Fintech firms have been at the forefront of AI adoption, and their impact is being felt in different areas of the financial sector. While some of these tasks involve routine automation, others are truly revolutionary.

Here are 4 ways in which AI-assisted platforms are transforming fintech.

1.   Credit Analysis and Process Automation

Small businesses and individuals need loans from time to time to keep their financial lives moving forward. Traditionally, these entities would approach a bank, fill out an application form, and then hope they would be approved.

The loan underwriting process at a bank involves checking the applicant’s creditworthiness. Typically, credit scores are checked, along with any glaring red flags such as bankruptcy filings and so on. While this process helps banks avoid risks that might affect their business, the problem is that they end up lending money to people who don’t need it urgently.

As a result, large parts of the population such as students, people with poor credit, the elderly, and new small businesses are left out. Fintech platforms have used AI to rethink the loan approval process by taking a wider variety of data into account.

These days, big banks are incorporating these models into their systems as well. For instance, Zest develops AI and ML algorithms that help banks avoid building biased credit-scoring models that would unfairly exclude a person because of race or other perceived risks.

Thanks to these sophisticated models, banks can approve loans to a larger audience, earn more money, and assist a greater portion of people who apply.

2.   Accessible Fintech Sites

From digital banking to cryptocurrency trading, online financial service platforms are thriving. Many people are used to managing their money online now, however; these services need to legally be available to everyone. If a website is inaccessible, then those with disabilities are unable to use these services. Recently, financial website Morgan Stanley was sued by a blind woman because the site was inaccessible. And they aren’t alone. In 2020 alone, app and video accessibility increased by almost 25%.

AI-powered accessibility solutions such as accessiBe have become extremely popular. The company’s AI-driven algorithm analyzes the various elements on a webpage and adjusts them to be accessible. Every 24 hours, accessiBe’s AI technology scans for new and revised content to fix. They ensure ADA and WCAG compliance, so the threat of ADA lawsuits is a thing of the past for other fintech sites.

3.   Fraud Detection

Fraud is an ever-present concern for the financial sector. As fintechs expanded into providing services, they discovered the reason traditional banks have huge compliance and risk departments. The propensity for fraud, especially credit card-related fraud, is high.

Their solution has been to automate a lot of fraud detection processes and involve human intervention in certain cases. As a result, AI analyzes the mountains of usage and spending data that these companies gather on their customers and flags suspicious spending patterns.

Any patterns that are within the algorithm’s confidence limits are instantly flagged, and card owners are alerted. If a pattern falls outside the confidence band, the problem is escalated to a human employee who can make a subjective decision. Thus, customers are fully protected from all instances of fraud.

Money laundering is a concern for banks and typically involves higher monetary amounts. The complex network of relationships between individuals and offshore companies and bank accounts makes it impossible for a person to manually evaluate each transaction. AI is best equipped to flag such suspicious activity and alert relevant compliance employees.

An example of a platform that is used by both commercial and investment banks is milize. The Japanese fintech claims to detect fraudulent activity with a 90% confidence limit and is changing the way banks execute fraud prevention protocols.

4.   Predictive Market Analysis

Investment banks are complex organizations, and a large portion of their income is derived from trading their books in the markets. These days, equity desks at banks are staffed almost entirely by machines, with human beings non-existent in traditional market-making positions.

In the derivative markets, where prices are opaque and conditions unpredictable, AI-driven quantitative models help traders limit risk and assume positions efficiently.

It isn’t just trading, predictive analytics are also useful in presenting clients with reports on what the markets might look like at some point down the road. This helps banks propose the best products for their clients and increase their bottom lines.

A Promising Partnership

AI is just getting started, and the day isn’t far off when every facet of the financial sector will be influenced by it in one way or another. As technology improves by leaps and bounds, the future of fintech is more exciting than ever before.


Read this next

Retail FX

Overcharts partners with dxFeed for CME Group Market Depth

“More and more traders are using Market Depth while conducting volume analysis. Its primary function is to help traders identify potential support and resistance levels.”

Digital Assets

CoinGecko expands collaboration with CER.live security rating

CoinGecko, one of the earliest crypto data aggregators, has integrated the security score data from the CER.live rating. The trust assessments given to crypto projects will be integrated into their pages on CoinGecko website to draw users’ attention to the importance of security.

Metaverse Gaming NFT

Klaytn taps Parity Technologies to build infrastructure for Klaytn-Substrate

Klaytn has initiated a collaboration with blockchain infrastructure company Parity Technologies to strengthen its tech stack and meet the demands of enterprises looking to harness the crypto technology.

Retail FX

US Retail FX brokers suffer steep fall in client deposits, Trading.com racked up $46K

Retail FX deposits at US brokerages, which have been struggling to eke out a profit in a strict regulatory environment, dropped in March 2022 by $35 million, CFTC data showed.

Retail FX

eToro supports Immutable X (IMX), Livepeer (LPT) and Cartesi (CTSI)

Israeli social trading network eToro has added support for trading three new tokens. Immutable X (IMX), Livepeer (LPT) and Cartesi (CTSI) are the next coins to join eToro’s list of featured digital assets.

Executive Moves

LiquidityBook hires Fintech veteran Jonathan Cross to lead EMEA business

LiquidityBook, a provider of FIX and OMS trading solutions for both the buy and sell-side, has added Jonathan Cross to its business team for the EMEA region.

Retail FX

Interactive Brokers’ traders now have direct access to TradingView

Professional charting and trading platform, TradingView has integrated the US-listed brokerage firm Interactive Brokers as the latest online trading partner.

Digital Assets

This Web3 infrastructure provider is on the verge of a radical upgrade

The crypto industry fueled the anticipation of the arrival of web3 with the introduction of Decentralized Finance, Metaverse, and more. And today, that web3 is finding support from various developers looking to build and develop the space to extract the most benefits out of it.

Digital Assets

Crypto bots: trading assistant 

The cryptocurrency market is a volatile one, with huge gains and dramatic dips. However, the most informed traders can use automated tools to maximize profits while minimizing risks.