Artificial intelligence and other closely related technologies are changing the world of finance. Those changes may be difficult to perceive in day-to-day personal and business transactions since they often involve adjustments to already existing computer and electronic systems; you can’t really see an algorithm, after all. However, the increasing use of new technologies in financial systems will have a profound effect on the way people conduct business and manage money. Take a close look at some of the major implications of artificial intelligence and the automation of finance.
Talk to the Robot
One of the ways where AI is transforming the financial industry is in customer service. Increasingly, AI is being used to provide intelligent, automated interfaces with customers for banking, investing, and insurance services. Whereas a decade ago people were vexed by dull, mechanical automated telephone services with a bank that left them desperate for a human operator; today, powerful new agents are allowing people to manage accounts, analyze investments, and make trades with no human interaction on the other side of the phone or internet link. AI as an advisory interface is rapidly becoming a ubiquitous part of business and personal finance decision making, so get used to it.
Powerful Tools at Your Fingertips
Another way that AI will transform finance is by providing the tools needed to maintain awareness of one’s financial situation, mitigate potential risks, and take advantage of fleeting opportunities. For example, new AI-based tools in apps will empower individuals to better execute their personal financial management activities. Some of this is unfolding right now; the San Francisco-based tech company Wallet uses powerful AI engines to analyze personal financial data and help customers monitor their money and make better financial decisions.
AI will be able to provide personal and institutional investors greater insight as well. Powered by algorithms, new tools will enable investors, corporations, and lending institutions to rapidly find and sort through layers of data and help guide critical investment planning. AI will increasingly play a greater role in decisions that lenders make concerning mortgage approvals for prospective borrowers, or whether a tech startup is worth the seed money it’s requesting. AI may also set the interest rate on your next auto loan or help determine the optimal rate of return on a potential real estate investment. Whatever human experts are doing right now to analyze financial problems and help inform choices, AI will soon be in place to do the same tasks faster and more efficiently.
Safer Payments and Streamlined Transfers
Financial fraud, especially with online payments, is a serious problem that’s only getting worse. Fortunately, new technologies offer some solutions for consumers and business to reduce the risks associated with online transactions. Blockchain, originally developed to facilitate secure cryptocurrency transfers, is increasingly showing promise for improving transaction security as well. Blockchain can provide an encrypted financial record of all steps of a financial transaction, and it’s extremely difficult to hack or tamper with. Using this technology will make it tougher for fraud or other financial crimes, as money or other financial instruments move from one point to the next.
Blockchain technology offers so much promise that it may significantly transform the very nature of financial transactions. Historically, businesses and consumers needed some sort of financial intermediary to facilitate most sales or other transactions. Blockchain payment networks are being developed that’ll enable parties to conduct all manner of transactions with no financial intermediary involved. This technology will help to reduce the fees and expenses associated with traditional financial transactions, such as the transaction fees that credit card companies charge merchants. It’ll further reduce business expenses caused by issues such as insufficient funds or bounced checks as well.
One of the biggest ways that AI and technology will transform the financial system is by enabling more people to participate in it. Currently, over two billion people have no access to financial institutions such as banks or stock exchanges. However, they increasingly have access to cell phones and other mobile devices. Borderless, decentralized, blockchain-based exchange systems could connect these people to financial institutions via their devices and give them the access to capital they need to save, invest, and spur greater economic growth.
Even in more developed countries, the very nature of blockchain will dramatically increase investor and consumer access to capital markets. For example, the market capitalization of the stock exchange in Johannesburg, South Africa, is approximately $988 billion. By contrast, the companies listed on the New York Stock Exchange are valued at over $28 trillion. Blockchain networks will help reduce the traditional barriers that individual and institutional investors around the world currently face, so they have greater opportunities to invest in and reap the benefits of the world’s greatest publicly traded companies.
Parting Thoughts: The Future of Finance is Now
Disruptive new technologies are changing all aspects of finance and money management. The sooner you learn about them, and how they affect your bottom line, the better off you’ll be. Knowledge of technologies such as AI and blockchain can help you better manage your finances and give your company a competitive edge over its rivals. So, do your best to learn about artificial intelligence and the automation of finance and put these incredible new technologies to work for you today.