Artificial Intelligence in the Fintech market


Gamco Team

Before talking about the artificial intelligence in the Fintech market we would like to mention that the term Fintech is applied today for modern technologies in the field of financial services and standard processes in the banking sector.

But what does Fintech mean?

The word Fintech is composed of the words:

  • EndFinancials
  • Tech: Technology

This term refers to innovative application system solutions that represent a new development in the financial services sector and mainly serve to help companies and consumers to better manage and administer financial operations through software, apps on smartphones... and of course, thanks to Artificial Intelligence all these processes are being optimized to improve processes, eliminate waste of time and resources, and innovate new ways of providing financial services (see the new "financial services", "financial services" and "financial services").neobanks"or models such as BNPL - Buy Now Pay Later). 

Today's Fintech tools are designed to challenge and modernize traditional financial service providers. Companies currently offering new financial products are, as of today, more agile and reaching more segments that were previously underserved by offering faster and cheaper services.

How many Fintech categories are there?

1. B2C ( business to consumer ) 

This category is intended for the general public, e.g. "neobanks"100% digital 100%s with no physical documents or paperwork, no physical locations, offering low-cost/free account and payment card, payment or personal finance management applications, as well as automated wealth management or investment tools.

2. B2B ( business to business ) 

It offers financial services to companies, SMEs or large accounts. An example of this category can be the online currency transfer (Kantox).

3. B2B2C ( business to business to consumer )

As platforms for crowdfundingwhich connect project leaders, creators, traders, SMEs and investors, individuals or professionals. For example, crowdfunding in donations with or without rewards, crowdlending (loans to SMEs) and crowdequity (equity financing).

4.  Insurtech in insurance

The companies in this category provide solutions for their clients in an innovative way through technology within the insurance sector. In this section we can find the typical insurance comparator (rastreator).

5. Regtech 

And the last category refers to companies that offer technology solutions to meet the regulatory and compliance constraints of banking players primarily (especially in customer insight or "KYC" in the jargon).

Evolution of AI in the fintech sector

The technological revolution in financial systems that we have been experiencing in recent years has so far focused on connecting people and collecting data. However, today, thertificial intelligence is here to stay in the financial sector and in the coming years we will see a wave of innovation in the sector..

With its growing ability to read, analyze and improve data collection processes along with its potential to influence the industry, it is causing more and more companies to bring this technology into their business processes and models to benefit from the advantages that Artificial Intelligence brings to their businesses. In addition AI plays a key role in fraud detection. Investment banks, retail banks and insurers should also benefit from the advantages it offers. 

default prediction software

Defaults prediction

Our ARM SaaS solutions in the financial field will help you predict defaults and detect those customers who present a high risk of default. In this way, you will minimize your business losses and reduce the time for decision making.

According to StatistaIn terms of financial services companies, about 50% incorporate artificial intelligence (AI) moderately into their operations or functions and about one-third (35%) have fully incorporated AI technologies into their business.

graph of Artificial Intelligence in the Fintech Market

And in global terms, AI in the Fintech market is estimated to move more than €26 billion by 2026.

Use of artificial intelligence in the Fintech sector

The use of Artificial Intelligence in the Fintech sector is very good and efficient in analyzing large amounts of data in real time to then analyze that information, infer optimal actions and subsequently make recommendations.

A clear example of the use of AI with customer information is to tell Fintech companies whether someone is creditworthy or not.. Banks and other financial institutions want to be able to extend credit to their customers, but they want to be able to calculate the cost properly:

  • High-risk customers: the price of the products will be higher as they have a higher threat of non-payment.
  • Customers at risk: the price will be lower as they have a lower threat of non-payment.

In general, to know if a customer is trustworthy, you look at their credit history, but with the use of AI, you can apply other patterns so that you can examine your own customer data and draw bigger and better conclusions. 

for the detection and fraud prevention in real time, finding patterns and relationships, and even identifying fraudulent activity. 

AI streamlines the work of fraud experts, allowing them to focus on higher-level cases, while AI moves behind the scenes to identify smaller problems and assist in the early identification of new ways to defraud. 

Other cases of use of AI for automated customer care. Through chatbots that are always prepared and ready to help you when you need something, improving the customer experience, since their questions are answered instantly.

In fact, a publication in FinTech Magazinethe digital community for the financial technology industry, brings us a brief investigation on the benefits of chatbots using AI in this sector:

  • Successful banking-related chatbot interactions will grow by 3.15 % between 2019 and 2023. 
  • Banks will save 826 million hours through chatbot interactions by 2023. 
  • 79% of successful chatbot interactions will be through mobile banking apps by 2023.

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