The Future Of Fintech, According To AI
There has been an explosion in the computing power of artificial intelligence. With great fanfare, Open AI, a startup that raised $1 billion from Microsoft
So it naturally felt like an opportunity to learn about the future of fintech – according to AI (especially since we’re at the end of the year, the usual moment for future predictions).
At the end we will dive into what this means. Here we go.
A conversation with Chat GPT about the future of fintech
Lazarow: Start with the basics: what is fintech?
Chat GPT: Fintech, short for financial technology, refers to the use of technology to improve and automate financial services. This can include a wide range of applications and technologies, such as mobile banking applications, online payment platforms and artificial intelligence-powered investment advice. Fintech has become increasingly popular in recent years as technology has advanced and more people have adopted digital financial services. The aim of fintech is to make financial services more efficient, accessible and user-friendly.
Lazarow: Where will we see the most fintech innovation going forward?
Chat GPT: It is difficult to predict exactly where we will see the most fintech innovation in the future, as the industry is constantly evolving and new developments are always emerging. However, some areas where we are likely to see significant fintech innovation include:
- Digital payments and money transfers: Fintech has already had a major impact on the way people make payments and transfer money, and this trend is likely to continue. We can expect to see more innovations in this area, such as the development of new payment technologies and the expansion of existing services such as mobile banking and peer-to-peer payment platforms.
- Blockchain and cryptocurrencies: Blockchain technology and cryptocurrencies have the potential to revolutionize the financial industry, and we can expect to see more innovations in this area in the coming years. This may include the development of new applications for blockchain technology, the creation of new cryptocurrencies and the growth of existing cryptocurrency markets.
- Artificial intelligence and machine learning: Fintech companies are also starting to make use of artificial intelligence and machine learning technologies, which have the potential to improve the efficiency and accuracy of financial services. We can expect to see more innovations in this area as well, such as the use of AI to automate processes and make more accurate predictions.
Overall, the future of fintech is likely to be driven by a combination of these and other innovations, as companies continue to develop new technologies and find new ways to improve financial services.
Lazarow: Why artificial intelligence and machine learning?
Chat GPT: Artificial intelligence (AI) and machine learning are increasingly used in the fintech industry because they have the potential to improve the efficiency and accuracy of financial services. Some of the key ways AI and machine learning are being used in fintech include:
- Automating processes: AI and machine learning can be used to automate repetitive tasks and processes, such as data entry and analysis. This can help reduce the amount of time and effort required to complete these tasks, and it can also help reduce the risk of errors.
- Improving decision-making: AI and machine learning can also be used to make more accurate predictions and decisions. For example, machine learning algorithms can be trained on large data sets to identify patterns and trends that can be used to make more informed decisions about things like credit risk or fraud detection.
- Improving customer experience: AI and machine learning can also be used to improve the customer experience by providing personalized recommendations and advice. For example, AI-powered chatbots can be used to provide customers with instant answers to their questions, and machine learning algorithms can be used to provide personalized investment recommendations.
Overall, the use of AI and machine learning in fintech has the potential to improve the efficiency and accuracy of financial services, and it can also help improve the customer experience.
Lazarow: What is embedded finance and where will it be applied?
Chat GPT: Embedded finance refers to the integration of financial services into non-financial products or services, such as retail goods or technology platforms. The goal of embedded finance is to make it easier for consumers to access financial services in a seamless and convenient way. For example, a retailer may offer its customers the option to pay for their purchases with a digital wallet or a mobile payment app, or a technology platform may offer its users access to financial tools such as budgeting and investment tracking. In addition, embedded finance can also be used by businesses to access financial services such as loans or payment processing.
Lazarow: What are some of the most enabling regulations for fintech?
Chat GPT: There are some regulations that are often seen as particularly enabling for fintech companies. Some examples of these regulations include:
- The Financial Conduct Authority’s (FCA) sandbox, which allows fintech companies to test their products and services in a controlled environment before launching them to the general public.
- The Payment Services Directive (PSD2), which introduced new rules for online payments and enabled the development of new payment services.
- The revised Markets in Financial Instruments Directive (MiFID II), which introduced new rules for the operation of financial markets and made it easier for fintech firms to access these markets.
Overall, these regulations are designed to create a more level playing field for fintech companies, enabling them to innovate and compete with traditional financial institutions.
Lazarow: What has been the impact of fintech on society?
Chat GPT: Fintech has had a significant impact on society, both in terms of the way financial services are provided and in terms of the wider economy. Some of the key ways fintech has impacted society include:
- Providing Greater Access to Financial Services: Fintech has made it possible for more people to access financial services, especially in underserved or underbanked communities. This has made it easier for people to manage their money and make important financial decisions.
- Increasing competition in the financial industry: Fintech has also introduced new competitors in the financial industry, which has helped to drive down prices and improve the quality of financial services. This has been particularly beneficial for consumers, who have more choice and more options when it comes to managing their money.
- Supporting economic growth: The growth of the fintech industry has also contributed to overall economic growth. Fintech companies often create new jobs and contribute to GDP growth, and the increased competition and innovation in the financial sector has helped support overall economic growth.
Overall, the impact of fintech on society has been largely positive, as it has made financial services more accessible, affordable and convenient for many people.
Lazarow: Which geographies have seen fintech transformation most sharply?
Chat GPT: The transformation of the financial services industry through the adoption of fintech has been most acutely seen in developed markets, particularly in North America and Europe. In these regions, the combination of advanced technology infrastructure, a highly educated workforce and a strong culture of innovation has facilitated the rapid adoption of fintech solutions by both consumers and businesses. In addition, regulatory environments in these regions have generally supported the development of fintech, which has also helped drive its growth. However, fintech is also gaining traction in other parts of the world, such as Asia and Latin America, as more and more people gain access to technology and financial services.
Lazarow: How is fintech driving financial inclusion?
Chat GPT: One of the key ways fintech is driving financial inclusion is by making financial services more accessible to underserved communities. For example, by offering mobile banking services, fintech companies can make it easier for people in remote or rural areas to access financial services, such as transferring money or paying bills. This can be especially important for individuals who do not have access to traditional brick and mortar banks. In addition, fintech companies can also offer financial products and services tailored to the specific needs of underserved communities, such as microloans or savings accounts with low minimum balances. It can help empower individuals and families to take control of their finances and improve their economic well-being.
What it means
Chat GPT demonstrates the power of generative AI.
This will affect not only fintech thought leadership (as this 1500 blog post was largely created with his help), but the delivery of financial services.
A few thought starters:
- Investment Research: One of the challenges for startups to become a public company is the availability of research coverage. This is generally reserved for larger companies with larger merchant volumes. Generative AI can power the long tail of investment research, giving research analysts the power to scale their work beyond a small number of stocks.
- Customer Service: Out with the standard, frustrating chatbots. Generative AI can power a new class of service.
- Transaction complexity: One major segment that fintech has tackled has been private markets, bringing greater access and transparency to everything from wine, art, shoes to legal finance and boat rebuilding. Yet one of the biggest costs is legal. If Chat GPT can generate sophisticated answers to complex questions, it should be able to do the same for legal drafting. This should speed up the fluidity of review for startup deals, but also anything illiquid
- For you the reader: do you think these takeaways were written by me or AI?