Artificial intelligence (AI) and blockchain have quite rightly been two of the dominating topics of conversation in the world of fintech for a number of years, and noise surrounding both technologies is not going to die down any time soon.
That is because the promise each offers is more than substantial enough to justify the hype. Financial services are currently undergoing a seismic period of innovation, and it is a well-held belief that AI and blockchain will be two cornerstones of fintech in the future.
The question, though, is what form these innovations will take, and where will they make the biggest difference.
For AI and blockchain to be successful, and to determine where and how they will successful, both will have to address some fundamental consumer questions: What can the technology do for me? How will it solve my needs, give me back my time, and reduce or even eliminate pain points in my day-to-day life?
Here are the four ways AI and blockchain might address these questions, and ultimately revolutionise finance:
1. Convenience, with security
Perhaps the overriding goal of technology is to provide greater convenience to people’s lives. In payments, this means making the process of paying for goods and services in as varied and as seamless a way as possible. However, as technology strives to make payments more frictionless, it is important to recognise that security is still critically important to consumers. As revealed in our latest Lost in Transaction report released earlier this is year, consumers are still sceptical when it comes to invisible payments.
It is clear that for frictionless payments to be fully adopted, all questions about the security concerns they raise in the minds of consumers will have to sufficiently answered. To do this, leveraging biometrics, enhanced machine learning, and behavioural analysis need to be deployed in tandem to virtually eliminate fraud. Only then will consumers trust that although their payments are happening in the background without interaction they remain safe and secure.
2. Mass personalisation
Global retail powerhouses now dominate the market. But where their rise to prominence has democratized purchasing, customers have had to sacrifice the personal relationships with local retailers that were able to provide them with an individual experience. AI has the potential to fill the gap; by facilitating customisation but on a mass scale, consumers will feel unique and valued by getting the same treatment from retail giants that they are accustomed to enjoying at local stores, and also receive relevant offers to them.
3. Automation, with control
The drive to automation is evident almost everywhere, but simple unrestricted automation will result in users losing control over any process. For this reason, a compromise needs to be found by which the benefits of automation are realised, but without the operator relinquishing all of its power to oversee the process through checks and balances.
A blockchain powered ‘smart contract’ delivers this solution; automation enables data to be processed efficiently at speed, but rules are put in place to allow human checking if an anomaly is detected.
As an example, for any monthly billing where the total is variable (i.e. a utility bill or similar) a smart contract could be put in place to automatically pay the bill each month if it falls within a defined range of values. If the bill is outside the value range then it is flagged and referred to the payee to investigate the balance due and determine what action needs to be taken.
If 98% of all bills fall within the value range, then the smart contract appropriately harnesses the power of automation whilst also allowing anomalies to be identified and managed.
4. Quantum performance gain
Both AI and blockchain aim to deliver an improvement in service speed and quality, as well as a reduction in cost to the business to generate further value.
For example, Paysafe Pay Later has reduced the time for an in-store credit application tenfold, from 20 to two minutes. Similarly, Ant Financial offers its "310" small business loans using AI: three minutes to apply, one second to receive the funds, zero manual intervention.
What does this mean for businesses?
For companies to really capitalise on the benefits of AI and blockchain, they need to structure themselves appropriately. As Stanford University professor and Google Brain co-founder Andrew Ng explains: a brick-and-mortar store with a website is not an internet company; and now similarly, an internet company with a neural network is not an AI company.
Some characteristics of an AI first company include enabling decisions to move down to engineers and product managers, having a single data warehouse for the entire company, and fully committing to automate and do things differently.
The companies that understand and execute AI and blockchain in this way will have a huge advantage in the marketplace as it continues to evolve.