This innovation presents opportunities for improved investment, risk management, and regulatory compliance, but it also raises concerns about privacy, security, and potential AI bias.
Understanding the impact of fintech and AI is crucial for professionals in finance, policymakers, and regulators. Exploring this intersection will help us prepare for the future of finance and ensure that benefits are realized while also addressing challenges and ethical concerns. This includes addressing important questions such as the role of traditional financial institutions in a changing landscape and the ethics and privacy concerns surrounding the use of AI in finance. The use of fintech and AI will create personalized financial advice, fraud detection, and prevention, increase the speed and accuracy of transactions, and create new products and services that make financial services more accessible.
Based on experiences across the globe, fintech and AI are proving to bring out increased efficiencies to the financial markets. For instance, as per CapGemini 2020, digital payment volumes are growing at around 11 percent a year overall, with even higher rates in emerging markets. E-money issued by non-banks, such as mobile-network operators, has enabled millions of users to store value and make transactions from their phones. In addition, digital ID is becoming an essential part of many fintech models, leading to the emergence of market infrastructures that facilitate the provision and validation of digital IDs. Furthermore, data exchange platforms are appearing as open banking and open finance frameworks expand, such as SGFinDex in Singapore and Data Empowerment and Protection Architecture in India. Artificial intelligence is also becoming increasingly prevalent in the financial industry, with AI-powered chatbots being used for customer service, and machine learning algorithms helping banks detect fraudulent transactions and make more accurate lending decisions.