Fintech Trends: Artificial Intelligence

Artificial Intelligence has become a leading trend that affects not only the Fintech and Insurtech industries, but also healthcare, business intelligence and marketing . It makes tasks efficient and lowers costs while attempting to simulate human behavior. It is predicted to take over the new year and grow.[1]

Definition

Artificial intelligence is a subfield of computer science, aiming to enable the development of computers who can perform jobs usually done by people. Its main focus remains thinking or intelligence. The development of AI systems tends to fall inside three main areas. First comes the goal of building systems that think like people. Then, there are those who look at the computation models that get the job done. Finally, some build systems to inform and inspire but not imitate.[2]

Apart from larger companies like Goldman Sachs and Baidu which have taken an active role in investing in Artificial Intelligence, many startups are also taking up a role in the quickly-developing trend. United Kingdom-based Aire, US-based ZestFinance and Germany-based EyeQuant are some of the many AI startups around the world which are working to improve human-machine interaction.[3]

Impact on Fintech

Fintech is an industry aiming to disrupt financial services and with Artificial Intelligence as a partner, it just might change society’s perspective. Every application of AI on the consumer level will require some level of payment and that’s where Fintech comes in. Such a relationship between the two trends will become key for the success of digitalization in the future.[4] In addition, AI has the potential to eliminate human error in banking procedures, allow banks to truly understand customer demands, make credit cards extinct, and influence the attraction of the unbanked to financial services. It will bring upon a digital revolution to banking that will transform the processes into ones that fit consumers’ lives. [5]

Impact on Insurtech

The insurtech industry requires a lot of data and its analysis. Artificial Intelligence is there to help with Big Data, allowing insurtechs to be more efficient in processing information. In addition, AI can minimize insurtech’s errors by providing easy-to-use algorithms. [5] Most importantly, the collaboration between insurtechs and AI will bring about more accurate risk prediction to improve the quality of services consumers receive. Developments such as robo-advisers – a tool that FinLeap’s venture Clark LINK uses – will particularly valuable and will have incredible impacts on the industry.[7]

Sources:

[1] 10 Fintech Trends for 2017 by Chris Skinner

[2] What is artificial intelligence?

[3] From Algorithmic Trading to Personal Finance Bots: 41 Startups Bringing AI to Fintech

[4] Artificial intelligence in FinTech

[5] Artificial intelligence: Shaping the future of FinTech

[6] Could #InsurTech AI machines replace Insurance Actuaries?

[7] How artificial intelligence, peer-to-peer technology and blockchain are changing the insurance industry forever

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Author

Dara Lazarova

Working Student Venture Development at finleap