Artificial intelligence is experiencing exponential growth the likes of which we’ve not seen since the introduction of the first smartphones. ChatGPT, DALL-E, and Midjourney, among others, have been transforming how creatives and businesses approach their marketing strategy.

Soon, consumers will be able to leverage the same benefits. Apple's plan to introduce generative AI to all of its smartphones will mark a major step in making artificial intelligence available to the masses. Once integrated with Siri, consumers will have the power of AI in their pocket as soon as 2024 according to industry experts (Source).

But as we move into a new year, AI will have more immediate disruption over numerous other sectors, including fintech. Let’s look at the most likely developments in fintech that will result from the advancement and adoption of AI technologies.

1. Managing risk more effectively

With the analytical power of AI-driven tools, businesses will be better poised to analyze and improve existing regulatory approaches, minimizing risk. 

“Savvy fintechs will harness AI in this way to integrate compliance into all workflows, which will require the development of departments devoted solely to the implementation of compliance across the product (…) Too often, organisations separate compliance from their end products, rather than viewing them as a single intertwined entity. Alongside this, regulators will also increase their use of AI in the coming year, tapping it to conduct more efficient analyses of companies’ reputations and risk.” [Source]

Stéphie Ndinga, Chief Compliance Officer (Swan)

Experts agree that AI will grow into a pivotal role in predictive analytics for risk management. The benefit here is in reshaping existing risk management approaches, which are largely reactive rather than proactive. Predictive AI analytics that facilitate proactive risk mitigation, analyzing vast datasets in real-time and identifying potential risks, will be capable of flagging issues far sooner.

Another key benefit of AI in risk management is its ability to identify subtle patterns and anomalies that can go undetected by the human eye. The margin for error is far smaller when an AI-powered subroutine is monitoring your company’s data and making real-time decisions in a fraction of the time.

As AI algorithms become more sophisticated, they will grow to be capable of not only predicting risks but recommending mitigations. These improvements will come as a benefit to both corporations and software vendors, and their consumers.

2. Evolving and improving customer experience

Fintech demands a strong customer experience. Predictions from The Fintech Times see AI as playing a pivotal role in driving improved customer experience through personalized financial services. We expect to see more advanced AI-driven chatbots and virtual assistants capable of providing real-time, tailored support.

This includes AI-powered predictive analytics that can anticipate user needs in advance. Financial platforms will be poised to offer personalized product recommendations, investment strategies, and financial advice based on each person’s financial goals and habits.

Additionally, AI-driven personalization will extend to user interfaces, making financial platforms more intuitive and user-friendly. We’re certainly beginning to see this already, with blockchain start-ups that are focused on ‘normalizing’ cryptocurrency investments by making the approach and the technology more beginner-friendly.

Fintech companies that successfully leverage AI to enhance their customer experience will likely gain a competitive edge in 2024. The ability to provide personalized financial journeys will be a key differentiator.

Fintech companies that successfully leverage AI to enhance their customer experience will likely gain a competitive edge in 2024.

3. Enabling a greater degree of automation 

Automation has been a cornerstone of Fintech's evolution, and AI will more than likely take that further in the New Year. Advanced automation will benefit businesses (source) by driving greater efficiency and reducing operational costs. Tasks usually handed off to support roles can be streamlined into processes that run themselves.

However, the application of AI-driven automation will go beyond routine tasks. AI algorithms are increasingly capable of handling complex decision-making flows, including loan approvals and risk assessments. The benefit here is not just for the company; consumers will have faster access to financial products as a result of faster decision-making.

Better still, AI's continuous learning capabilities mean that these automation systems will become more adaptive and responsive over time. We’ll see models that become stronger based on real-time data and user interactions that strengthen the technology, much like existing AI tools have been trained on existing data. This adaptability will be a crucial asset for Fintech companies that want to grow and evolve quickly in response to fast-moving AI trends. 

4. Strengthening blockchain technology 

The blockchain can only be trusted so far as the individual transactions within are immutable and visible. Industry leaders predict that the integration of artificial intelligence will lead to more secure and transparent financial transactions. Combined with AI's analytical capabilities, blockchain will be able to make improvements in fraud detection without compromising the integrity of financial data.

In 2024, we anticipate the maturation of AI-powered blockchain applications. Smart contracts, powered by AI, are one of the key areas to watch – complex agreements that can be executed automatically based on set conditions. Everything from international payments to complex financial derivatives will benefit from this change, offering streamlined, protected transactions.

More than that, artificial intelligence will begin to address one of the key issues of blockchain: scalability problems. As FinTech platforms handle an increasing volume of transactions, a pairing of AI and blockchain could optimize processing speeds. We’ll be able to guarantee that financial transactions remain swift and efficient, even during peak times and increasing usage.

5. Changing the way that payments are handled 

The payment landscape is evolving rapidly and industry insights suggest that AI will accelerate that transformation into 2024. AI-powered payment solutions will offer faster, more secure, and seamless transactions, while machine learning algorithms analyze user behavior to personalize the payment experience. We expect to see innovations like biometric authentication become more prevalent, too. This is almost a necessity in a landscape affected by constant growth in phishing attacks and other cybersecurity threats.

Another anticipated trend is the widespread adoption of voice-activated payments. Above, we talked about Apple’s goal to integrate AI into Siri, and we can almost certainly expect to see such features gradually appear as the next evolution in biometrics after fingerprints and facial recognition.

But AI's role in payments will more than likely extend to fraud prevention too. Predictive analytics and machine learning algorithms could be leveraged to analyze transaction patterns in real-time, quickly identifying suspicious activities and preventing unauthorized transactions. This proactive approach to security will be another critical requirement in fighting the global rise in cybercrime.

With user security taken care of, AI can also be steered toward improving financial products. AI algorithms will analyze user spending behavior, preferences, and financial goals. From here, systems will be able to offer tailored recommendations for credit cards, rewards programs, or savings accounts. Until now, companies have had to rely on complex datasets to market specific products to a specific audience. Artificial intelligence will offer a far more streamlined and automated process, reducing operational spend on such activities.

We’re also seeing another trend, which is the emergence of decentralized finance (DeFi) solutions powered by AI. These decentralized systems, typically built on blockchain technology, allow peer-to-peer transactions without the need for traditional intermediaries. The evolution of smart contracts that we spoke of will help to ensure the efficiency and security of DeFi transactions.

However, all of this is dependent on two key expectations: cooperation between vendors, and the interoperability of their software. Open banking initiatives, facilitated by AI, are already beginning to take shape and enable seamless integration between different financial platforms. For companies, this is a key to building a brand in an evolving payment space, but for consumers, it will also provide a unified and interconnected financial ecosystem.

6. Modernising traditional financial services 

Traditional financial services are not expected to be left behind. According to Forbes, AI will see diverse applications that include customer service automation, fraud detection, and portfolio management. As AI algorithms continue to evolve, financial institutions will be able to provide more accurate and personalized financial advice, improving overall customer satisfaction and trust. 

Customer service automation, powered by AI-driven chatbots and virtual assistants, will not only handle routine queries but also provide users with personalized insights and recommendations. This level of automation can significantly reduce response times, enhance user experiences, and free up human resources for more complex tasks. While banking giants are typically the slowest to react on new technologies, these changes will be key to remaining competitive in the face of new and growing challenger banks.

This is also another area in which innovation in fraud detection will be crucial. In 2024, AI-powered fraud systems will draw on advanced machine learning algorithms to analyze patterns, anomalies, and user behavior in real-time. We must consider that cybercriminals will be utilizing AI in their attacks moving forward, which is why a dynamic approach to fraud prevention is needed. Artificial intelligence will be a necessity in staying ahead of emerging threats, providing financial institutions with robust protection against cybercrime.

Finally, traditional portfolio management will also be expected to benefit from AI advancements in 2024. AI-driven robo-advisors will offer consumers personalized investment strategies based on their risk tolerance, financial goals, and market conditions. The ability of AI to process vast amounts of financial data in real-time will enable more informed investment decisions than would ordinarily be capable of from human advisors, optimizing portfolio performance and mitigating risk.

Looking ahead to build the best solutions

The coming year will be a pivotal chapter in the ongoing development and integration of artificial intelligence-driven technologies. While fintech companies can make significant improvements in efficiency and capability, we all have a responsibility to remember transparency, fairness, and user-centricity.

Here at Chaser, we’re focused on applying the latest learnings from AI to our accounts receivable management software. We’re already trusted by thousands of SME vendors across the world, which is why our roadmap for 2024 is focused on the practical and legal integration of artificial intelligence. 

Chaser’s accounts receivable software already enjoys seamless integration with more than 15 accounting systems, but we’re excited about the possibilities that AI advancement will bring. As we move the product forward, we’ll be focusing on consumer simplicity and efficiency as our two key driving factors.

To learn more about how Chaser can automate your accounts receivable process, book a call with us or start your free, no-obligation 10-day trial today.