Artificial Intelligence in Finance: $447 Billion by 2023

ARTIFICIAL INTELLIGENCE IN FINANCE
Artificial intelligence in finance is transforming the way we interact with money. AI is helping the financial industry
to streamline and optimize processes ranging from credit decisions to quantitative trading and financial risk
management. And with the aggregate potential cost savings for banks from AI applications estimated at $447
billion by 2023, banks are finding new ways to incorporate the tech into their services.
APPLICATION
The benefits of implementing AI in finance—for task automation, fraud detection, and delivering
personalized recommendations—are monumental. AI use cases in the front and middle office
can transform the finance industry by:
 AI based chatbots
 AI in finance can be used for task automation, fraud detection, and delivering
personalized recommendations. Business Insider Intelligence
 Enabling frictionless, 24/7 customer interactions
 Reducing the need for repetitive work
 Lowering false positives and human error
 Saving money
 Automating middle-office tasks with AI has the potential to save North American banks
$70 billion by 2025. Further, the aggregate potential cost savings for banks from AI
applications is estimated at $447 billion by 2023, with the front and middle office
accounting for $416 billion of that total.
CREDIT DECISIONS
A credit score is a numerical expression based on a level analysis of a person's credit files, to represent the
creditworthiness of an individual. A credit score is primarily based on a credit report, information typically sourced
from credit bureaus.
Lenders, such as banks and credit card companies, use credit scores to evaluate the potential risk posed by lending
money to consumers and to mitigate losses due to bad debt. Lenders use credit scores to determine who qualifies
for a loan, at what interest rate, and what credit limits. Lenders also use credit scores to determine which
customers are likely to bring in the most revenue. The use of credit or identity scoring prior to authorizing access or
granting credit is an implementation of a trusted system.
Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies,
landlords, and government departments employ the same techniques. Digital finance companies such as online
lenders also use alternative data sources to calculate the creditworthiness of borrowers.
Credit is king. A recent study found 77% of consumers preferred paying with a debit or credit card
compared to only 12% who favored cash. But easier payment options isn't the only reason the
availability of credit is important to consumers. Having good credit aids in receiving favorable financing
options, landing jobs and renting an apartment, to name a few examples. With so many of life's
important necessities hinging on credit history, the approval process for loans and cards is more
important than ever.Artificial intelligence solutions are helping banks and credit lenders make smarter
underwriting decisions by utilizing a variety of factors that more accurately assess traditionally
underserved borrowers, like millennials, in the credit decision making process.
DATAROBOT
How it's using AI in fiance: DataRobot provides machine learning software for data scientists,
business analysts, software engineers, executives and IT professionals.
DataRobot helps financial institutions and businesses quickly build accurate predictive models
that enhance decision making around issues like fraudulent credit card transactions, digital
wealth management, direct marketing, blockchain, lending and more.
Industry impact: Alternative lending firm Crest Financial is using DataRobot's software

to make more accurate underwriting decisions by predicting which customers have a higher
likelihood of default.
MANAGING RISK
Time is money in the finance world, but risk can

be deadly if not given the proper attention.
Accurate forecasts predictions are crucial to both
the speed and protection of of many businesses.
Financial markets are turning more and more to

machine learning, a subset of artificial intelligence,
to create more exacting, nimble models. These
predictions help financial experts utilize existing
data to pinpoint trends, identify risks, conserve
manpower and ensure better information for future
planning.
For example, can the hardware, software, apps and integrations keep up with ever-changing
technology? A setback, limitation, risk, error or threat in IT can impact every facet of a business.
To mitigate negative outcomes, it’s worth investigating an IT project management software that
can help you manage risks in IT and other projects.
CONCLUSION
While the migration from traditional banking channels to online and mobile banking was
underway pre-pandemic due to the growing opportunity among digitally native consumers, the
coronavirus dramatically amplified the move as stay-at-home orders were implemented across
the country and consumers sought more self-service options. Insider Intelligence estimates both
online and mobile banking adoption among US consumers will rise by 2024, reaching 72.8% and
58.1%, respectively—making AI implementation critical for FIs looking to be successful and
competitive in the evolving industry.

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ARTIFICIAL INTELLIGENCE IN FINANCE

Industry impact: Alternative lending firm Crest Financial is using DataRobot's software

Time is money in the finance world, but risk can

Financial markets are turning more and more to

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