Artificial intelligence (AI) is leading the front of the digital transformation strategy in finance today. Using AI to improve core banking operations and tailor services will deliver over $250 billion in value across the industry, according to the McKinsey Global Institute. Between voice assistants, chatbots, process automation, and predictive analytics, financial services are indeed getting a major makeover. This is just the beginning. As we step into a new decade soon, let’s discuss the impact of AI on finance, how that affects consumers and businesses, and how AI will change the financial services sector in the future.
A brief history of digital financial services
Traditionally, financial services consisted of brick-and-mortar banks. The evolution of online banking started in the 1980s. It wasn’t until 1994 when Stanford Federal Credit Union became the first financial institution in the United States to offer internet banking to all of its customers. Not even a year later, Presidential Bank became the first bank in the country to offer customers access to their accounts online. By 2006, over 80% of banks offered Internet banking.Since the mid-1990s, financial services have come a long way. The most widespread trend in the banking industry today is the shift to digital, specifically mobile app banking and digital banks. In an era marked by convenience and speed, customers don’t want to waste their time going to a branch. This rings true of Millennials and Generation Z, who both account for the majority of the workforce now.This digital transformation has led to increased competition from (digital-only banks) like and , along with the consolidation of startups and smaller banks. In 2018, FinTech funding reached $32.6 billion by the end of Q3. That’s up 82% from $17.9 billion in 2017, according to . Even tech companies like are beginning to penetrate consumer banking. This further crowds an already volatile market. How are these companies staying ahead of the competition? The answer lies in AI.
