2020 reshaped the whole infrastructure of the financial industry, giving it new dimensions of corporate working. Because of the Covid-19 pandemic, it experiences a sudden increase in digital engagement along with new ways of work processing. Banks and currency exchanges shut their in-person operations and experience an increase in remote (online) trading. The outbreak highlights the need for banking apps, online customer support and less physical interaction. Today, businesses have to look for more technologically advanced solutions to streamline their internal and external operations.
AI and Blockchain for the Financial Sector – What Can They Do?
Modern innovations have made our lives easier, calculators are the most common example. Just imagine you have to manually calculate all the numbers, it would require an additional department inside a company that will do all the calculations.
In the early 2000s, businesses hesitated to use new technologies because they thought it would interrupt their processes and require more effort. However companies today are confident when it comes to the use of technology or day-to-day operations.
AI along with blockchain can improve the workability of numerous processes in the financial industry, for instance, transaction processing, onboarding new customers and meeting regulatory compliance.
Let’s dive deeper into the AI will revolutionize the financial sector;
Quick Payment Processing
It’s a common saying that Time is Money and businesses pay much attention to save their time and accelerate their processes. Blockchain-based payments do not depend upon third-party authorization, thus are faster and cheaper.
Banks can use Optical Character Recognition for fetching data from paper-based documents. The currently available OCR is AI-powered and uses natural language processing to digitize paper data. Banks can save their time by automating data extraction and processing using OCR. The global market size of OCR was USD 7.8 billion in 2020 and from 2021 to 2028, it will grow at the CAGR of 16.7%.
Regulatory Compliance
The financial sector has to comply with different regulations ranging from data privacy to know your customer and anti money laundering. Under the KYC laws, they have to verify the identity of every new customer through their ID documents. By doing so, financial institutions can reduce identity theft and account takeover. KYC is performed during account opening, artificially intelligent KYC solutions check the authenticity of documents by analysing the holograms, MRZ codes and rainbow prints. This gives the best level of accuracy of KYC and reduces inaccurate results.
AML solutions incorporate AI for screening names against the global watchlists and sanction lists and analyse the pattern of financial transactions. Additionally, enhanced due diligence is performed on high-risk customers.
Enhanced Customer Services
Opening an account in investment firms takes more than one day because they have to collect information from several resources about their customer’s business and financial details. The process involves communicating with different corporate entities. Blockchain (decentralized database) enables data storage from different sources in one place. It makes it easier for AI algorithms to analyse it and make decisions accordingly.
As a result, businesses can deliver customized services with greater security, efficiency and accuracy. Using chatbots to cater to customer queries will minimize the delayed responses. Through AI, banks can automate most of their manual tasks, even account reviews.
Less Financial Crimes
The global amount of money laundering is between USD 800 billion and USD 2 trillion per year. Nevertheless, the incorporation of AI and blockchain can put this to an end. Blockchain gives transparency and traceability in data, ensuring a strong defence against financial crimes. Furthermore, the usage of smart contracts will help in having authentic client data and banks can save time on updating their data later. AI analyses the customer behaviours to combat payment and credit card frauds, this assists in a better response to scams.
Concluding the Above
Undoubtedly, AI is the future, and the world is actively adopting it. Integration of AI and blockchain with the existing solutions will streamline the business operations and the advantages are countless. From security to speed and customer convenience to compliance, these technologies are helping the financial industry in many ways.
