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Artificial Intelligence in the Finance Industry: A Snapshot

From cattle and cowrie shells to paper currency and credit cards, financial transactions have taken many forms throughout history. Then along came fintech’s cryptocurrency. Fintech (financial technology) is constantly evolving, and finance professionals need to keep up.

A Master of Business Administration (MBA) may be preferred or required for higher-level roles in finance. For prospective MBA students, accreditation and affordability are common considerations. The MBA with a Concentration in Financial Planning and Analysis from Arkansas State University offers both. Students can earn their MBA in as few as 12 months and be ready for advanced careers and higher earnings.

What Is Fintech?

Modern fintech arrived with automated teller machines (ATMs). Writing for Co, Sean Peek defines fintech as “any technology that delivers financial services through software.”

Fintech makes it possible for you to transfer money to a friend who pays for dinner, purchase coffee with a loyalty-building app and directly deposit your paychecks. Of course, direct deposits are not new, but fintech is transforming traditional financial services.

Four Ways AI and Machine Learning Are Changing Financial Services

Say, “Alexa, add apples and oranges to my cart,” and this device will start filling your cart and ask, “What else?” Amazon’s Alexa applies machine learning (ML) to have these “conversations,” using past purchases and popular items to make recommendations.

Machine learning is a type of artificial intelligence (AI), which is the ability of a computer to perform tasks usually done by humans. Together, ML and AI are changing how the financial industry does business. The following are four examples:

1. Customer Service

Conversational chatbots aim to eliminate wait times and improve efficiencies. In banking, for example, chatbots can check account balances, transfer money, set up secure payments and provide other automated assistance.

Chatbots free up human agents to handle more complex customer needs, resulting in savings of up to 30% in customer service costs, according to Chatbots Magazine.

2. Banking as a Service (BaaS)

Finance is one of the most regulated industries in the U.S., creating barriers to banking startups. Fintech is changing that with AI-enabled Banking as a Service (BaaS). With BaaS, a business can offer digital banking services without its own banking license. Instead, the branded non-bank integrates a licensed bank’s digital services into its product.

Yotta Savings is one example. Yotta partners with an FDIC-insured banks to provide services. But, unlike traditional banks, Yotta’s prize-linked accounts incentivize saving to help users improve their financial security. Customers have a chance to win big every week, with prizes up to a Tesla or $10 million.

3. Customer Satisfaction

Customer satisfaction is the key to loyalty, and happy customers attract new customers. A McKinsey & Company survey of retail banking customers found that AI improved customer satisfaction in many areas. Deposits grew 84% faster for banks with the highest customer satisfaction rates, compared for those banks with the lowest ratings.

4. Risk Management

Anyone who has gotten a text or phone call about an attempted credit card charge has experienced using AI and data mining to prevent credit card fraud in real-time.

Data mining is one of the top uses of AI. Investopedia defines data mining as “a process used by companies to turn raw data into useful information by using software to look for patterns in large batches of data.”

Other uses of data mining in risk management include:

  • Identifying suspicious behavior to prevent money laundering
  • Evaluating credit and loan applications to assess the likelihood of repayment

Big data is only getting bigger, and MBA grads with data skills may have an edge in hiring decisions.  Prospective MBA students will consider the return on investment (ROI). In fact, an MBA’s strong ROI includes projected earnings that are 77% more than earnings for a bachelor’s degree. Based on a 2021 Corporate Recruiters Survey, the median salary of MBA graduates is $115,000, compared with $65,000 for those with a bachelor’s degree. Over a lifetime, that difference can amount to an extra $3 million.

In addition to preparing grads for careers such as financial manager, operations manager/director and financial analyst, this MBA program in financial planning and analysis can put aspiring chief financial officers (CFOs) on a path to success.

Learn more about Arkansas State University’s online Master of Business Administration with a Concentration in Financial Planning and Analysis program.

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