Over the last few years, we have witnessed the transformation of AI-based solutions in fintech industry from experiments and prototypes to full-fledged business applications. However, this year may be a breakthrough.
AI to help fintechs compete with banks
Started a month ago A.D. 2024 will likely be the year when AI begins to completely transform the financial industry, introducing personalization at an unprecedented level. Predictive systems will be able to assess a customer’s creditworthiness with increasing precision using unstructured data, emotion analysis, and reinforcement learning. As a result, we will experience an increase in the availability of financial services and, at the same time, their optimization to the individual needs of the user. This trend will certainly continue this year.
Huge changes are likely to occur in process automation and operational efficiency. AI algorithms will be able to automatically recognize and process complex financial applications with increasing precision, reducing the burden on employees and the risk of human errors. This will also open the door for small businesses to compete with large financial institutions. This will be a gigantic opportunity for many fintechs and financial projects that are already challenging traditional financial institutions en masse and are increasingly boldly reaching for their piece of the financial pie.
Synthetic brains in the service of fintech
The real game changer for the industry may be neuromorphic processors, often described as “synthetic brains” – i.e. systems inspired by the human brain that have the potential to change the rules of the game in the field of machine learning.
They are distinguished by their ability to process information in a more energy-efficient manner, using complex connection systems that actually function similarly to synapses. This unique design allows for data processing and learning at high speed and minimal energy consumption, which is crucial for mobile fintech applications where response time and reliability are as important as cost-effectiveness.
This is the moment when artificial intelligence ceases to be just a software function and becomes something bigger – an architecture that mimics our own neurology.
One of the most exciting applications of neuromorphic processors in fintech is their ability to detect and respond to fraud in real-time. Thanks to their ultra-high processing power, these systems can analyze irregularities in financial transactions on an unprecedented scale. Moreover, as machine learning becomes more advanced, neuromorphic processors will be able to predict new types of fraud before they have a chance to become widespread.
Data safety first
However, the development of AI also poses certain threats to fintech entities. The issue of data security is certainly at the top of this list. Fintechs will probably often have to face questions about “How do you protect customer information when algorithms analyze it in the cloud?”
When it comes to cloud data processing, fintech companies will have to focus on transparency and data management principles, including: will have to clearly define what data is processed, how it is protected and who has access to it. An important direction of development will certainly be the “Privacy by Design” and “Security by Design” technologies, which from the very beginning implement security measures at every stage of financial product development. In 2024, using the Zero Trust model – “never trust, always verify” – will become the industry standard, regardless of the location of data (whether on-premise or in the cloud).
Fintechs will probably often have to face questions about “How do you protect customer information when algorithms analyze it in the cloud?”
Cyberattacks
As the fintech industry developed at an unprecedented pace, criminals’ keen eyes turned to modern technologies and systems that have become the lifeblood of global finance. In 2024, the scenario of intensified cyberattacks will certainly not be just a dystopian vision, but will become commonplace. Today’s cybercrime no longer resembles the simple phishing schemes of years ago. Fully automated and self-learning algorithms using artificial intelligence conduct coordinated attacks that can disable even the most secured financial systems.
This year, fintechs will pay more attention to new solutions, such as behavioral biometrics or quantum cryptography, which may be a response to increasingly sophisticated attacks. The dynamic progress of legal regulations will strengthen the defense against cyberattacks worldwide.
Legal regulations
And speaking of regulations, they will certainly be one of the biggest challenges the sector will have to face. The fintech industry realizes that legislation around the world must keep up with the pace of technology development and is often a barrier to innovation. Employee competencies are also of key importance – the industry needs specialists with an understanding of AI who are able to manage its proper implementation.
It is highly probable that in 2024 we will find out whether AI and fintech are like a developing organism – dynamic, full of potential, but requiring appropriate conditions for development, or rather the opposite. For the industry, investors and users, the key to success is finding a balance between innovation and responsibility. With the right approach, the possibilities are virtually endless, and finance as we know it today can become almost unknown tomorrow. Although challenges exist, with appropriate preparation and regulations, the world of fintech with AI in the main role has everything needed to rewrite the future.