Investors, businesses, and regular users are all motivated to use AI in the fintech industry. Smart software eliminates unnecessary costs, makes managing money more convenient, and helps both companies and individuals earn more. If you are looking to break into this domain, this article will tell you about the market conditions, top competitors, and promising niches, as well as advise you of the potential risks.
Let’s begin with an overview of the market conditions, and see whether they are favorable for any newcomers.
The global market for AI is massive, surpassing $62 billion in 2020 and predicted to grow by over 40% each year. Financial technology is no exception. In 2021, artificial intelligence in the fintech market was valued at $8 billion and is expected to reach $27 billion by 2026.
Such powerful results come from several sources:
All signs are pointing toward the same conclusion: now is the right time to develop a fintech application.
AI and ML (machine learning) find the most use in the following areas:
In short, the machines can improve decision-making and user experience, as well as save the adopters money.
The hottest examples are:
The boom in AI-based fintech continues, partially because there is still a place for new players.
AI and fintech are a match made in heaven. Here’s why.
This is how AI will help fintech companies prosper:
Regular people also feel the positive effects of blending fintech and AI:
If you are looking to work on a project that combines fintech and artificial intelligence, here’s what you stand to gain.
This is how artificial intelligence for fintech can be used in practice.
Wealthfront is one of the leaders in the robo-advisor niche with 440,000 users and $25 billion in assets under management (AUM). It is both very accessible (the minimum account is just $500) and allows a wide pool of investment options, including cryptocurrencies. It also has very low fees — just 0.25% for most accounts and no charges on transactions.
Wealthfront was acquired by UBS in early 2022, so the company is expected to expand at an even faster rate than before.
Kasisto creates conversational AIs that can understand ambiguous queries and reliably answer users’ questions. It uses advanced natural language processing (NLP) available in tailored packages for business banking, consumer banking, and investment management.
Kasisto has received $66 million in venture capital and netted some high-profile customers, including J.P. Morgan, Emirates NBD, and Westpac.
Adyen is a payment processor, point-of-sale app, card issuer, analytics platform, and (as of May 2021) a digital bank. This Dutch company uses AI in many capabilities: revenue optimization, customer insights, risk management and more. Its customers include McDonald’s, Uber, LinkedIn, and Booking.com. And everything is united in one platform for the customers’ convenience.
This Indian company offers a powerful data analytics platform that is mostly used by banks and non-bank financial companies (NBFCs). It helps prevent fraud, make better lending decisions, manage assets, and get reliable credit scores.
Perfios received over $120 million in funding and its client list includes Deutsche Bank, Canara HSBC, and Home Credit Finance.
Suplari helps corporations manage their expenses and find avenues for cost-saving. Its platform replaces an in-house team of analysts and a flood of Excel sheets that would’ve been needed otherwise.
The platform is used by companies like 21st Century Fox, Nordstrom, and Hulu. In 2021, Suplari was acquired by Microsoft for an undisclosed amount.
There are certain challenges that you will likely meet if you want to learn how AI is used in fintech.
Financial information is just as intimate as one’s medical history or personal life. And if you want to scale, you will have to deal with a lot of it, whether in B2B or B2C models. This means you have to keep your algorithms secure by design and pay extra attention to hacker-proofing your processes and databases. Not to mention that analyzing this will require serious optimization efforts to ensure a smooth user experience.
The finance industry is thoroughly regulated. This means putting extra effort into compliance with local, federal, and, possibly, international law. You will have to ensure close cooperation between your technical and legal teams to minimize future regulatory risks.
People and institutions are wary and won’t give their money to just anyone with a bright idea. You will have to work hard to make customers trust you. Now add the mistrust some people have for AI, and your task becomes even more daunting.
In the financial sector, reputation is everything, and even one high-profile failure can ruin your company’s carefully constructed image. This means that you have to work on edge cases, as well as the most common ones, and ensure that everything works reliably. A fintech MVP is much more advanced than that of most other domains.
EPAM Anywhere Business is known for the quality of its fintech app development services. Many companies have already made use of our services to great effect.
First, the value we present came from hard work and domain experience. EPAM Anywhere Business developers have worked on projects for blue chips and SMEs alike, and brought them both impressive ROI, satisfied customers, and even a decreased carbon footprint.
Second, we facilitate getting everything in one place. EPAM Anywhere Business has access to thousands of developers across all skill levels and specialties. As a result, our company can design, develop, and support any application, and even provides fintech web development services. No need to manage several contractors, when one will suffice.
The last but not the least benefit is compliance. EPAM Anywhere Business is an international company with experience in many markets and many legal systems. As a result, the team you’ll get will know how to create software that would fit the requirements of national and international laws.
Given the increasing demand and skyrocketing investment, 2022 is the right time to enter the fintech market. Yes, keeping up with the legal demands, protecting user data, and establishing a solid reputation takes a lot of work. But with a reliable development partner like EPAM Anywhere Business, conquering this task will be much easier.