Have you ever heard of the term “AI” before? Seeing how fast the technology advancements are, humans can now use the AI for their advantage in dealing with a lot of stuff.
It turns out that AI is not only an intelligent robot, because in its application many other industries have used it, one of which is artificial intelligence in the financial industry.
Artificial Intelligence is a branch of computer science to create machines that can do human work. This computer machine can carry out its own learning based on data or information obtained and make predictions based on that data. And that’s the reason why it’s beneficial to implement AI technology in the financial industry.
What are the benefits that can be felt by the financial industry with the application of AI?
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How The AI Works In The Financial Industry
AI is usually described as a learning field of tech and science that followers various computeristic disciplines that enable critical thinking that always adapts to the surroundings and the tasks that need to be done.
Artificial Intelligence (AI) creates an advanced computer development technology that is able to think, see, hear, walk, talk, and also feel. AI is a developing technology that is systemized with computers and allows it to function like human intelligence and even human behavior.
And to the characters, AI is able to learn from the experience, using the knowledge in the proper situations, using a combination of imagination and creativity to create something, having difficult tasks to complete, and deliver the results as expected.
AI has been initiated since the early 1950s by several mathematicians and computer experts, one of which is Alan Turing. Turing set up an experiment to discover the concept of a “thinking machine”. And the results are satisfactory, that a computer can ideally demonstrate intelligence if an interview with a human is carried out, a conversation between an invisible human and an invisible computer.
However, all did not go according to the wishes in the experiment, Turing was also considered unable to explain many things. Moreover, many of the critics argue that the development of AI to transform human intelligence into computers is impossible. However, dynamic technological progress proves that little by little the development of this quite ambitious AI will be realized, even though there are stages.
In the business world, technological advances provide opportunities and great influence for businesses in the world. The e-commerce business focuses on digital trade and transactions. This digitalization process makes these businesses inevitably have to go with the flow and take a role in the world of digital technology.
We see that nowadays many people are starting to be more creative in terms of entrepreneurship or business in general. Likewise with the e-commerce business which has begun to grow and even compete with the share of the retail business which originally dominated the market.
The old and classic type of shop has now turned into an online store, which is more reliable and easier to access from anywhere. This is due to guaranteed security, ease of transaction and ease of making payments by offering quick and convenient payment methods. Recently, retail entrepreneurs have also started trying to enter the world of e-commerce business and try their luck in this business.
AI technology plays an important role in advancing the e-commerce business with several features such as RFQ (A Request For Quotation). This feature can provide notifications for searchers of an item to get the item they want. So, customers no longer need to bother looking for items one by one on an e-commerce website because AI will search for them and finally provide notifications or pop-ups.
In addition, AI technology has also penetrated the payment system. For example, QR pay (Payment Barcode) is able to detect and make payments easily and quickly. AI technology has developed a lot and provides many benefits, especially in terms of security, ease and speed of transactions.
Advances in AI technology encourage e-commerce businesses to continuously improve themselves and provide the best service for customers. Because, it is also natural for everyone to look for the easiest things in their life activities. Especially in today’s technologically advanced era.
The Role of AI To Make Digital Payments More Secure
Risk Management
In the world of banking, this artificial intelligence can process large data, both structured and unstructured, to improve analysis related to risk management. Artificial intelligence can identify, measure and control risks that may occur in the banking world.
For example, of the millions of people, many of them do not have a bank account. Artificial intelligence can help verify new customers because it is already integrated with the population data. The system will recognize the faces, signatures and fingerprints of new customers according to the identity card. So, in some bank policies, you no longer need to open an account according to your resident card address because AI can already identify and control these risks.
Prevents Fraud
Since the entry of AI into the financial industry, its use has proven successful in preventing fraud. The increase in online transactions and also the use of e-commerce since the Covid-19 pandemic is directly proportional to the increase in credit card fraud or digital transactions. AI has proven to be very effective in preventing this from happening.
The artificial intelligence system will detect any unusual behavior. AI will analyze based on customer behavior, location, and buying habits. If there is an unusual pattern change, the computer machine will run a security mechanism and the customer’s account may be blocked to prevent fake transactions. Apart from that, AI can also detect other financial crimes, namely money laundering.
Customer Relationship Management
This one is actually more like a strategy. The goal is to find out the needs and behavior of customers in order to provide maximum service and maintain relationships with customers. That’s why artificial intelligence exists, namely to help process huge consumer data.
In the banking area, AI will be able to determine customer needs quickly and efficiently. The machine will analyze the decisions customers have made and current financial and market conditions to determine which banking products are suitable for them. That way, the bank can map out the customers who need to be contacted to offer products.
The use of Artificial Intelligence (AI) in the financial industry proves that computer sophistication can help human performance to overcome problems related to massive data, especially now that the financial world is getting more advanced. There have been many uses of digital banking applications which certainly require more protection with artificial intelligence.
Many banks and e-commerce have been present to provide banking services digitally by creating digital bank applications. Even though banking services have integrated with digital technology, in reality, most of the customer orientation and service processes still depend on the customer’s physical presence.
This then makes most customers who have the potential to use credit services still not served, evaluated, and even obtained protection efficiently. In addition, there are still many banks that target MSMEs but do not have sufficient technology and knowledge to assess their creditworthiness.
So with these problems, combination of machine learning and AI can be a great answer to their problems. Banks can then learn to categorize, match loan types and terms, and practice managing risk better.
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