Every day thousands of companies around the world are trying to develop new technologies or find new applications for existing ones, this makes us move rapidly into the future, even if it becomes complex for some to keep pace with developments as new discoveries or new trends are constantly occurring. In the journey of innovation, artificial intelligence can be of great help, which is able to predict new trends or develop new technologies thanks to its multiple capabilities.
In recent years, we have discovered a wealth of applications for artificial intelligence. Although at first it was thought that this technology would only be useful in the field of computing, helping Google (NASDAQ: GOOGL) or Microsoft (NASDAQ: MSFT), time has proven otherwise, and new ways of implementing AI in all industries are constantly being discovered to give new impetus.
The financial sector does not escape from digitization and new technologies that are being developed worldwide; traditional banks such as US Bancorp (NYSE: USB) or Citigroup Inc (NYSE: C) are beginning to compete with “startups” or “FinTechs” that want to capture new customers by offering innovative and cost-effective solutions. This year, the IDB (Inter-American Development Bank) presented a report about the FinTech ecosystem in Latin America and the Caribbean and shows how it has grown by 112% in the number of platforms of this type between 2018 and 2021.
Corporate banks such as Goldman Sachs Group Inc (NYSE: GS) or Citigroup (NYSE: C) manage millions of dollars daily, and technology is a fundamental support in this digital era to efficiently boost the results obtained, trying to infer the trend of the markets or even to measure the risks that may exist. This is where AI and data analysis have exponential growth potential in the coming years. But there are still some barriers for those who are just starting out and cannot implement these state-of-the-art systems at such a high cost, which puts them at a clear disadvantage, and this is where FinTechs emerge as a feasible option.
Upstart Holdings (NASDAQ: UPST) is a company that opted to look for new AI utilities and based its entire structure on it. The intelligence created was trained to measure the risks associated with bank loans; the same platform is capable of granting personal loans automatically as if it were a traditional bank, but in this case, the risk analysis is determined with variables totally different from the conventional ones, such as employment or level of education; this will allow flexibility in the credit lines.
While traditional banks use systems such as those of TransUnion (NYSE: TRU) to evaluate their clients, these new options emerge in the market, such as Upstart Holdings (NASDAQ: UPST), which, in addition to implementing the new technologies, open the doors to everyone having the opportunity to obtain financing; financial inclusion has arrived hand in hand with technology.
Those at the forefront of new technologies, those who can reduce costs, offer new services or improve customer service, will be the great winners of the future of personal finance, as indicated by company trends and international organizations such as the IDB (Inter-American Development Bank).
Implementing these automatic systems could make a difference from the traditional systems used for several decades in conjunction with humans, who are the decision-makers in most cases. AI can do this work faster but simultaneously in a “safer” way by analyzing a greater number of variables and data at the same time, thus reducing the risk in decision-making. These FinTechs are the doors to a world of possibilities for the future. Perhaps we could soon find banks operating totally or partially with artificial intelligence by analyzing large amounts of data.
Financial institutions are starting to implement AI to improve their services, and we see this in virtual assistants that solve customer problems or are used in security measures, fraud prevention or biometric authentications; all this contributes to an improvement in the user experience and could eventually lead us to fully autonomous banks.