To learn how AI’s role in the economy has changed since the publication of this article in 2018, read our newest article on this topic – AI’s Expanded Role in the Economy.
Starting about 18 months ago, we began hearing about Artificial Intelligence (AI) and the stock market, AI and fintech, AI and banking. AI is not going away. It’s sticking around, and it’s changing the way we handle money. Here’s what you need to know:
AI started playing a major role when IBM acquired Promontory Financial Group
In November 2016, IBM announced that they were in the final stages of acquiring Promontory Financial Group, a risk management and regulatory compliance firm. This was a huge acquisition for the financial industry. Many banks and fintech companies relied on Promontory’s advice to keep trades and transactions compliant.
What this acquisition did was bring IBM’s Watson to Wall Street. And that introduced huge changes that we are going to feel repercussions from for years to come.
AI thinks for the customer
This is where stuff starts to get really crazy. Instead of the banker advising the customer or the customer coming to the bank with a need, AI does the hard work for them.
For instance, AI embedded in a bank’s accounts can tell a business owner that based on their current activity and the economy, they’re going to need to take out another line of credit in four months.
AI looks at a bank customer’s actions, makes predictions, and tells them what their next steps are.
AI helps make the identification process easier
Banks have always been sticklers about identity. And for good reason. They didn’t want someone with a stolen identity opening an account and ruining their credibility. Thus the piles of paperwork you need to fill out for that business checking account or that new fund you’ve started.
But now, AI can do the heavy lifting for both the customer and the bank. Using voice recognition software, it can quickly tag a person as either who they say they are or someone completely different.
AI means banking customers have more options
With the advent of AI into the financial world, new financial products are being created by the dozens or hundreds. This means that banking customers have more investment options, more retirement options, and more choice in the types of companies they invest in.
For instance, if a customer is only interested in investing in social good companies, there’s a financial product that can make that happen for them. Or if they’re only interested in putting their money behind fast-growing tech firms, there’s another product out there for them.
AI gives banks more power over their data
Banks have always collected a tremendous amount of data – they have to know who you are to open your account, but throughout the lifetime of your account they can also see who pays you, who you pay, how your money is growing or not growing, and how you’re using your money.
In the past, banks had little insight into this data, but now with the power of AI, they can harness it to tailor products and marketing to each specific customer’s needs.
AI can reduce fraud on Wall Street.
Promontory was a compliance firm, so over its long history, it caught fraud after it happened. Now, with Watson backing it up, it can catch stock market fraud before it happens by analyzing transactions, learning patterns, and even using voice recognition software to overhear conversations at trading desks.
Tip of the iceberg
Sound crazy? This is only the beginning! The way we do money is going to change dramatically over the next few decades. Are you ready?
Learn how ADM can help! Call us at 414-961-6600.