How does artificial intelligence fit into the fintech sector? Well, technology seems to be the answer to lower costs and efficiency.
Most recently, Wealthfront, Venmo and Sentient Technology have added AI capabilities to their products. AI has enabled these companies to analyze customer data to create better strategies.
Although AI seems to be the direction fintech companies are headed, there are still concerns about this new technology. AI holds the promise of efficiency, better decision-making, stronger compliance and potentially even more profits for investors.
Technology seems like the most obvious way to lower costs, especially for banks. Arun Srivastava, a Partner at Baker & McKenzie explains, “A logical response by banks is to automate as much decision-making as possible, hence the number of banks enthusiastically embracing AI and automation. But the unknown risks inherent in aspects of AI have not been eliminated.”
Many financial professionals believe that financial regulators are not up to speed on AI. An increase in the use of AI comes with an increase of reliance on the technology and a decrease in jobs.
Another concern with AI is that it lacks human intuition which is crucial for risk management and quick decision-making.
Many worry that AI technologies will have a difficult time understanding unexpected outcomes or decisions.
Since AI technology is still so young, it is best to use this technology as a tool, rather than have it run the show just yet.