Artificial intelligence (AI) is revolutionizing the finance industry, driving innovation and automation across the sector.
The material benefits of the technology are becoming increasingly apparent, with the aggregate potential cost savings for banks alone estimated at a colossal $447 billion.
Lenders of all kinds are employing AI to make more accurate decisions with regard to loan approvals and risk assessment, cutting losses by an estimated 23% annually.
At the same time, using AI-driven data tools can reduce the workload for finance teams by as much as 20%, freeing up resources to focus on more complex and strategic endeavors.
In short, AI is rapidly becoming a core component of the modern financial landscape. Given the potential benefits, it is no surprise that a report from McKinsey indicates that, while reported overall AI adoption remains steady at around 55 percent, more than 75% of respondents report their companies plan on increasing their investments in AI.
In this post, we'll look at how AI is transforming the finance industry, what impact it will have going forward, and how your business can leverage the technology to stay competitive.
AI is becoming a core component of the financial landscape, with more than 75% of companies planning to increase their investments in artificial intelligence
The emergence of AI in finance
The concept of AI has been around for decades, but recent advancements in natural language processing (NLP), machine learning, and big data have allowed AI to start to feel its presence in the finance world.
Technically, the first adoption of AI in finance occurred as far back as the 1980s, with Edward Feigenbaum's expert system used to identify fraudulent credit card charges.
With the scope and range of data now available to businesses, AI is being utilized by financial firms for various tasks, including risk management, market analytics, fraud detection, and customer support.
At the same time, AI has the ability to meet the growing demand for personalized customer service without compromising the security of customer data.
The benefits of AI adoption have led to rising investments in the technology from financial institutions, with 85% of finance businesses having a clear strategy for adopting AI in the future.
Find out more about where AI in finance is headed, during this panel discussion hosted by AI industry experts from the ICAEW, Chaser Zeitios, and Aquilla as they discuss what the future of finance will look like with the rise of artificial intelligence.
AI's multifaceted role in finance
One of the greatest strengths of modern artificial intelligence applications is their ability to address multiple challenges simultaneously.
From predictive analytics to automated customer service, AI is playing an ever-expanding role in finance, with both retail and corporate banking applications.
For example, the use of machine learning algorithms can streamline loan processing and reduce risk by up to 40%. Big data analysis can help identify patterns for more accurate market predictions or fraud detection.
AI also boosts customer service applications. Businesses can use automated chatbots and virtual assistants to provide 24/7 customer service at a fraction of the cost.
This improves the customers' overall experience and frees up resources and trained staff to focus on more complex tasks. Replacing low-skill manual tasks, such as data entry and document management, with automated bots also helps improve operational efficiency.
Making accounts receivables easier with AI
Accounts receivable is one of the most critical aspects of finance and one that can be significantly improved with the help of AI.
With AI-driven automation, businesses can streamline the entire process from invoice creation to payments. AI can also recognize patterns in customer payment behavior and be used to optimize collection strategies.
Chaser’s market-leading AI-driven credit control platform is helping thousands of businesses save time and money by automating the process of chasing outstanding customer payments.
By leveraging AI, Chaser has introduced a range of new features that are transforming the way businesses approach their finances, including:
Recommended chasing times
Knowing when the most effective time to chase customers for payment can be a challenge. Chaser's AI-driven technology offers recommended chasing times. Based on the customer's payment history such as when they typically open emails and when they usually make payments, this tool lets businesses send payment reminders precisely when their customers are most likely to pay, letting them maximize their collection efforts.
By employing AI-driven insights, Chaser customers are able to collect payments faster, relying on Chaser's track record of optimizing communication strategies to identify when customers are most likely to respond and take immediate action.
Late payment prediction
Taking a proactive approach to collections can be difficult, especially when dealing with large customer bases. Chaser's AI-driven Late payment predictor tool lets businesses know instantly which invoices are the most likely to be paid late, by analyzing a range of data points. Finance teams can then prioritise effectively and focus their efforts on the invoices that are most likely to be paid late.
By taking early action and engaging in proactive collections strategies, organizations are able to reduce their time spent chasing customers for overdue payments and minimize the risk of late payments becoming delinquent.
Beyond accounts receivable: AI's expansive impact
Beyond accounts receivable, AI is having a profound impact on the broader finance sector.
The technology is revolutionizing how businesses operate in an ever-changing global economy, from automated trading and algorithmic pricing to AI-driven market predictions.
Machine learning algorithms can detect patterns in data that would be difficult for humans to interpret, allowing organizations to identify trends before they become apparent to the general public.
At the same time, AI offers new opportunities for businesses to develop more personalized products and services. By leveraging customer data, banks can tailor their offerings to individual customers' needs more accurately and efficiently than ever before.
Unleashing strategic potential
As already mentioned, one of the most essential benefits of AI is its ability to free up resources and staff to focus on more complex tasks.
In finance, this means freeing up analysts and traders from mundane tasks such as data entry and document management, allowing them to instead focus on developing new strategies for the company's future.
Additionally, by leveraging AI-driven insights, businesses can make more informed decisions and identify new opportunities for growth.
For example, machine learning algorithms can analyze a range of data to identify trends in customer behavior, allowing organizations to adjust their product or service offerings accordingly.
With AI-driven market analytics, businesses can also identify new opportunities to capitalize on emerging trends or untapped markets. This, in turn, allows them to maximize their return on investment and create a more profitable future for the business.
Addressing challenges and ethical considerations
With any emergent technology, particular challenges and ethical considerations must be addressed.
AI is no different, and organizations must consider the technology's legal implications. AI-driven systems can process large amounts of data quickly, but care must ensure that customer privacy is not compromised.
Organizations also need to understand potential biases in their algorithms or datasets that might lead to inaccurate decision-making.
Responsible AI adoption requires transparency and accountability. Organizations should take the necessary steps to ensure their AI systems comply with relevant regulations and ethical principles.
The IEEE Global Initiative is an example of an organization that is taking the lead in responsible AI governance. The initiative's focus on practical, actionable guidelines and standards provides organizations with a comprehensive framework for developing and managing responsible AI systems.
Future horizons: AI in finance
Artificial intelligence is still a developing technology with huge potential to revolutionize the finance industry.
Organizations that embrace AI-driven solutions will be well placed to take advantage of its benefits and drive future growth. AI-enabled automation, predictive analytics, and personalization are just a few areas where AI can have a transformative impact on how businesses approach their finances.
The possibilities are endless, and organizations can gain a competitive edge by embracing the technology. However, they must also be aware of potential risks and take appropriate steps to ensure that their AI systems comply with relevant regulations and ethical principles.
By taking advantage of AI's opportunities while following best practices, organizations can unlock their strategic potential and create a more profitable future for their business.
Unlock your businesses' potential with AI and Chaser
Chaser's software is a prime example of the innovative solutions that can be created when AI is employed in finance. By automating and streamlining accounts receivable processes, Chaser has helped businesses save time, money, and enhance customer experiences.
AI is here to stay, and finance is no exception. With its immense potential to transform the industry, AI-driven finance solutions are only set to become more prevalent in the coming years, and keeping up to date with the technology can give businesses a vital competitive edge.
To find out about where AI in finance is headed, join this panel discussion hosted by AI industry experts from the ICAEW, Chaser Zeitios, and Aquilla as they discuss what the future of finance will look like with the rise of artificial intelligence.
You can also learn more about how Chaser's AI-driven technology can help your business maximize its return on investment and reduce the risk of late payments by arranging a demo with one of our experts or signing up for your no-obligation 14-day free trial.
