Before we consider the five technologies that are set to transform Fintech, consider what Fintech is. Fintech is the synthesis of technology and finance and the harmonic combination of two of the largest industries into a single field. Naturally, its impact is enormous. Regarded as cutting-edge innovations a few years ago, now Fintech solutions are a daily reality. According to McKinsey, 80% of traditional financial institutions were exploring innovations in 2018.

Conversational AI is a type of artificial intelligence that facilitates the human like conversation between a human and a software system in real time. It is a piece of software that a person can talk to, like chatbot, social messaging app, interactive agent, or smart device. These applications enable users to ask questions, get opinions, find support, or complete tasks remotely. Conversational systems are powered by a conversational engine named NLP (Natural Language Processing, a branch of AI that deals with linguistic and conversational cognitive science). They make use of large volumes of data processed with machine learning, and natural language processing to aid imitate human interactions, recognizing speech and text inputs and translating their meanings in different languages.

Conversational AI is a type of artificial intelligence that facilitates the human like conversation between a human and a software system in real time. It is a piece of software that a person can talk to, like chatbot, social messaging app, interactive agent, or smart device. These applications enable users to ask questions, get opinions, find support, or complete tasks remotely. Conversational systems are powered by a conversational engine named NLP (Natural Language Processing, a branch of AI that deals with linguistic and conversational cognitive science). They make use of large volumes of data processed with machine learning, and natural language processing to aid imitate human interactions, recognizing speech and text inputs and translating their meanings in different languages. Businesses can setup automated chatbots or virtual assistants that can communicate with humans via voice or text and in different languages of user preferences.

Before we consider the five technologies that are set to transform Fintech, consider what Fintech is. Fintech is the synthesis of technology and finance and the harmonic combination of two of the largest industries into a single field. Naturally, its impact is enormous. Regarded as cutting-edge innovations a few years ago, now Fintech solutions are a daily reality. According to McKinsey, 80% of traditional financial institutions were exploring innovations in 2018.

Artificial Intelligence (or AI) is already being widely deployed across industries, sometimes in ways you wouldn't even have imagined. The financial sector, which is heavily regulated, may not seem like an industry that would be poised to harness cutting-edge technology. But with the right planning, regulatory experts, and smart selection of use cases, AI can be put to work for the good of the employees and customers. AI in banking and finance can also lead to huge cost savings, within different business units or channels. There are three main channels where banks can use artificial intelligence.

For financial institutions that have yet to adopt conversational banking, the potential user base already exists. Nearly two-in-five U.S. adults are now users of smart speakers, such as Amazon Alexa or Google Home. In November 2020, eMarketer estimated that 128.0 million people in the US used a voice assistant – 44.2% of internet users and 38.5% of the total population. Consumers are programming themselves to find things using their voices. They're doing less button-pressing and more speaking to control their entertainment experiences, for example--from Amazon Fire TV to Apple TV.

Plexiglass and human "traffic monitors" will go only so far to ease concerns of both consumers and employees about in-person banking while the COVID pandemic continues. Financial institutions are realizing that long-term adjustments will be required in how retail banking is conducted. This dramatic shift has sharply increased interest in various types of conversational banking, especially as a means to ease the pressure on call centers. Most often, conversational banking takes the form of chatbots powered by artificial intelligence. But it also includes voice-activated digital assistants such as Alexa, Google Assistant and Siri, used with a variety of devices including mobile phones and smart speakers.

It used to be like this: people need banking services, bank provides services, people get services. The relationship between brick and mortar banking and their customers has a history of being dry, one-sided and purely monetary. Times are changing though and this paradigm is going through a major transformation. The digitization of the banking process has lent itself to the creation of a new medium of communication between bank and customer. Customers no longer have to walk into a physical store to manage or get answers regarding their finances.

From the implementation of self-serve ATMs in the 1960s to the widespread use of computers in the late 1970s and early 1980s, Fintech has always been the cutting edge space for innovation that directly impacts the consumer. It's no surprise then that the banking industry spent nearly $30 billion on data and business analytics tools and software in 2019. Business Insider Intelligence estimates that banks can save as much as $447 billion through artificial intelligence by 2023, by using it for customer service, anti-fraud efforts, and underwriting support. Additionally, banks have been cited to use AI tech far more than many other industry, with 75% of banks already doing this to some degree. It's the consumer-side of banking that presents the greatest opportunity for AI integration, however.

This article was originally published in the Disruption Banking magazine, issue no 4 'Focus on AI.' Banking, like every other industry, is feeling the pressure to adjust to the age of instant gratification. This need for immediate delivery and satisfaction is pushing out old systems and practices to replace them with new banking technology that can respond to the needs of perpetually impatient customers. But how fast is this happening? It is difficult for such a traditional, heavily-regulated industry to move fast enough because it's weighed down by years of legacy technology. We've seen this many times over working on digital transformation projects with banks in the region.