The holy grail of finance is predicting market direction, and data science is helping to unlock this possibility. As algorithms are created that detect trends and detect risks, they are becoming a valuable tool for fintech companies. They also help to educate consumers about potential risks. Here are a few ways data science is transforming the Fintech industry.
Artificial intelligence
AI is reshaping the financial industry in a variety of ways. First, providers can cut costs by automating processes that once required human intervention. Second, it provides improved layers of security for customers by predicting fraud and churn. And third, AI helps businesses determine the best way to prioritize client lists. For example, by using data about existing credit cards and loan repayment habits, they can customize interest rates and other terms for the individuals they serve.
Machine Learning
AI and Data Science are reshaping the Fintech market and can be used to make more informed decisions and deliver a personalized customer experience. Using machine learning, companies can monitor communication between customers and companies, predict market trends, and develop financial and product improvement strategies. Thus, ML and Data Science can potentially transform the Fintech industry in numerous ways.
Blockchain bitcoin networks
The Fintech industry was one of the early adopters of data science. Companies such as Cane Bay Partners VI, LLLP built their services around algorithms, opening up a whole new consumer base of digitally savvy individuals who desired a seamless financial experience while on the go. Using data science, fintech companies analyzed the data in real-time and made better decisions based on that data. In addition, the technology can be used to monitor consumer behaviors and detect fraud and credit risk.
Crowdsourcing
Regarding data science and crowdsourcing in the fintech industry, the two terms seem to go hand in hand. Both use the internet to gather information, and crowdsourcing is effective. According to David Johnson Cane Bay, companies can improve the quality and quantity of their data by utilizing the crowd as a resource while saving internal resources and time. In addition, the use of crowdsourcing is also a great way to identify new ideas and innovations.
AI-based decision-making
One Asian bank has harnessed AI to free up 360,000 hours of labor annually from their backend operations by analyzing over 15 million customer records. The AI model learned which products to recommend to each of these micro-segments and increased their likelihood of a sale by threefold. Another example shows how AI can be applied to contract management. Banks can better serve their customers by using this technology to predict the churn rate.
AI-based fraud detection
Fraud is a growing problem in the finance industry. According to a recent report, fraud will cost the finance industry more than $56 billion by 2020. Fraud not only costs the companies money but also ruins their reputation. Using AI-based fraud detection, banks can detect suspicious activity and block users before becoming victims of fraudulent transactions. AI can also detect unusual purchase patterns and behaviors. Once implemented in banking systems, it can even prioritize cases of suspected fraudulent activity.