Artificial intelligence (AI) is changing finance, gone are the days of meeting the bank manager face to face to ask for a loan, today you are more likely to be talking to an AI and not even realise it.
Financial institutions are increasingly using AI to make loan decisions by using real time analysis of customer data by analysing both risks to themselves and assessing the creditworthiness of a potential borrower using data gathered.
Some of this data will come from established sources, while some is unexpected –
Some loan applications, from how much someone can borrow, to loan calculations and even loan approval can now be assessed by artificial intelligence with no human interaction.
By analysing massive amounts of data, AI can quickly recognise abnormal transactions, behaviour and identify potentially fraudulent activities in near real time.
Traditionally, human investigators would sift through suspicious transactions and potentially fraudulent applications, taking hundreds of man hours, AI can now do the same work in minutes.
Machine learning can analyse and predict behaviour at a molecular level across all aspects of a transaction, from beginning to end, helping consumers and financial institutions minimise risk from fraud.
AI is also helping in the world of credit scoring, using machine learning to predict and adjust credit scores.
AI enables a better credit scoring system by correctly determining a borrower’s risk, regardless of their social demographic condition, which has long been a point of contention, as minority and low income groups have had traditionally less data to their credit history.
Better credit scoring by artificial intelligence can be done by looking at data that isn’t usually considered in a typical credit score, such as whether the borrower spends their money on necessities or luxuries, and even their earning potential.
AI is here to stay and will grow more ingrained into our everyday and financial lives.