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Fintech is the vanguard of the Artificial Intelligence revolution

Publication Date: 25 May 2018 - By Market Mogul By Market M.

Thematic Macro Multi Asset Financial Services Technology


Artificial intelligence (AI) seems like it is everywhere these days. People interact with it on a daily basis, by talking to Amazon’s Alexa or one of any number of chatbots that are taking over the internet. The real benefits of AI, however, are far less visible. The technology is currently working its way into industries of all kinds, promising to unleash a wave of innovative new products and solutions to suit every market.

There is one industry, though, that is already at the cutting edge of AI technology compared to all others. The financial industry, not previously known for embracing change, is now riding the AI wave into the future. This change has come in the form of fintech startups which have merged the latest in technology with the data-driven global financial markets. They are producing some of the most useful – and lucrative – examples of AI in the world today. Here is where you can find them.

Investment Advising

The first part of the financial market that AI has invaded in a big way is in asset management and investment advice. It is a sector that is a natural fit for machine learning and data-hungry AI. Today, robo-advisors seem like they have been around forever, and they are one of the most popular ways for the average investor to manage their market positions. Beginning with the launch of Betterment in 2008, the field of AI investment management platforms has grown to control $200bn in assets worldwide. Not bad for a decade’s work.

Real Estate Financing

Another major part of the global financial markets that are beginning to feel the power of AI is in the worldwide real estate investment market. Worldwide, it is a market worth an estimated $217trn in value, so it is no small share of global wealth. AI is beginning to see applications on the finance side of the real estate market, with startups such as Lenddo and ZestFinance leveraging AI data analysis to assess the creditworthiness of borrowers. There is even an online mortgage advisor called Habito that uses AI to help prospective homebuyers to find the best possible deal on a loan.

Financial Planning

As previously mentioned, there is a whole raft of AI-powered services designed to help investors create and manage their portfolios, but they do not do anything for those that are not part of the investor class. In the US, that is a pretty large cohort. Estimates indicate that about 46% of Americans do not invest in the stock market, so it is a significant portion of the overall population.

For them, financial advice consists of strategies for saving or meeting day-to-day obligations, not wealth building. That is where fintech startup Pefin comes in. Their AI financial advice platform learns about the spending habits of its users to create day-to-day strategic financial advice that the user can actually use, rather than just generic tips on where to pinch pennies.

Building the Future of Wealth

If the recent history of the advances of AI into financial services is any indicator, it is not going to be long before just about every kind of financial decision or transaction will be influenced by AI in some way.

On balance, that is not a bad thing. Increasing the usage of AI in financial markets should serve as a stabilizing force since they are not prone to panic and emotionally-driven decisionmaking. There is little doubt that there will still be some room in financial markets for the human touch in the future, but chances are, AI will be the king of the hill. Other industries should take note – where fintech has gone, they too will soon follow.

This post appeared first on The Market Mogul.


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