Fintech is the newest development of the financial industry. It is the integration of technology in finance. Many factors have played a crucial role in the evolution of fintech, but artificial intelligence is arguably the most significant.
How is AI Transforming the
Fintech Industry?
There’s no doubt that technological breakthroughs have played a key role in the growth of the Fintech market over the course of the last decade. One of the segments of the financial industry that has been most heavily impacted is the forex market. Technology has helped to create a global behemoth that now sees more than $5 trillion traded every single day.
While technological innovation in the marketplace has taken several different forms during this time, there’s little doubt that artificial intelligence (AI) has had the biggest impact of late. In the banking sector alone, artificial intelligence is projected to save $7.3 billion by 2023.
But how exactly has this advanced technology and machine learning continued to drive change in the fintech market, and what does the future hold for the currency investors of tomorrow?
1. Learning from Previous
Transactions and Using Predictive Algorithms
Machine learning and predictive analytics are providing a lot of value to financial companies by studying previous transactions. This is true in banking, trading platforms and other financial sectors.
Banks are trying to understand how to give better customer service by analyzing past transactions. They can also use this data to improve cybersecurity.
The stock exchange, forex markets and other trading platforms are also using previous transactions to provide better services. Make no mistake; trillions of dollars are already being invested through AI in the fintech market, while online brokerage firms such as Oanda are increasingly looking to incorporate machine learning into its analytical tools.
In layman terms, this means that traders are being presented with advanced and predictive algorithms that enable them to identify relatively low-risk and low-volatility investments, whether they maintain a short or long-term focus.
These algorithms leverage machine learning to mine and collate relevant datasets, many of which pertain to pertinent trends and previous results. The subsequent data signals are then used to determine insightful and informative trends, which can inform future trades with genuine accuracy.
Ultimately, this enables you to trade more effectively on a daily basis, especially in instances where you operate as a day trader who looks to execute a high volume of orders in a relatively short period of time.
2. Biometrics in Banks
Many banks have started using biometrics to provide better services to their customers. According to Builtin, they are using services like Hooyu to provide better biometrics analysis.
This data is obviously highly useful for security purposes. Biometrics can make it much more difficult for malicious third-parties to impersonate a customer. However, there are other benefits of biometrics technology in banking.
Customer service is one of them. These AI services are able to use government IDs to identify their customers and learn more about them. This helps them provide customized experiences for every customer.
3. Making Sense of Useful but
Disorganized Datasets
Given the audience sizes and engagement evident across social media sites, it makes sense that this should be a haven of information for currency traders in the digital age.
The issue here, however, is that social media is generally home to vast and disorganized datasets that are incredibly hard to collate (let alone analyze or decipher effectively).
AI is beginning to buck this trend, however, as its automated and predictive nature makes it well-placed to organize such datasets and extract invaluable real-time insight from channels such Twitter, Facebook and LinkedIn.
This data can then be displayed in a way that traders can understand, creating more effective decision-making going forward and evolving the concept of social trading onto a whole new level.
4. Reducing Trading Risks
Risk remains a major factor in any financial market, although the foreign exchange happens to be the single most volatile entity of its type in the world.
Fortunately, advanced tools such as stop losses help to minimize risk; primarily by enabling traders to set a predetermined loss-limit that automatically causes your position to close when this threshold is reached.
AI is also beginning to provide more effective and intuitive risk management measures for traders, potentially creating a scenario where investors can be alerted of any potential threat to their open positions ahead of time.
By also negating the need for advanced technical knowledge in some instances, it can also be argued that AI naturally negates risk by simplifying the process of collating data and executing orders.
Artificial Intelligence is
Transforming the Fintech Sector
Fintech is a growing field. Many technological developments have contributed to its progress. AI is helping fuel growth in the fintech market in many ways, so it will be far more valuable in the years to come.
