Imagine the next time you go for a loan and, instead of your credit score, it’s your overall financial habits that are being scrutinized. And, mind you, we’re not talking about simply looking at how many time you applied for a loan and were rejected or how many late payments you guilty of. We’re talking about every financial move you make – from the very first time you started leaving a financial footprint.
Where AI Resides Within the Financial Industry at Present
Though financial institutions have been testing AI pilot projects for decisions based on an applicant’s spending and borrowing habits, thus more accurately forecasting their worthiness, many institutions are not yet to place their full trust in them. Nonetheless, it is intriguing to ponder what potentials lie ahead for us if and when Artificial Intelligence finally get’s that stamp of approval. I suspect AI will prove both transformative and disruptive.
It’s a fact that the science and programming that goes into this type of learning machine is very sophisticated and is developed especially with credit and lending models in mind, yet to actually take that first step into the unknown seems much more difficult. Why are we humans like that? We invest great amounts of time, money and energy into creating technological tools only to delay their use out of fear.
How Far Is AI At This Point in Time
Big data is actually what allows the effective leveraging of micro-level insights possible in the first place. This means traditional ways banks evaluate their customers have no other direction than to be transformed. Furthermore, there is an increasing desire by customers to use digital channels, which guarantees they’ll be leaving ever growing digital footprints.
With that said, we are well beyond the earlier forms of automation and are now witnessing the advent of Machine Learning. From there we could see Machine Learning evolve into deep learning, which means computers can actually reason and make their own decisions. This type of technology – in theory – would make the process of compiling and analysing huge amounts of data totally free of any human intervention whatsoever, and arriving at an output so complex it would not be comprehensible by humans.
By taking very large amounts of an individual’s overall financial data – banking transactions, earning and spending, information from social accounts, and even friends and family history – and processing through sophisticated AI systems, I would imagine we could find these systems could practically create a profile so comprehensive that it could predict when and what kind of vehicle you’ll purchase next.
Humans Won’t Be the Only Ones Watched By AI
Humans are not the only risk factors for banks. Businesses have their own set of digital footprints that is collected and added to the ever-growing pool of big data. Leading lenders are definitely going to be using Learning Machines to predict the probability of a business’s success or failure.
Why couldn’t AI be used to forecast whether or not a business will fail or not? At the present time, a fintech company, I Know First, is combining science and math with the financial world by predicting daily investment forecasts. It uses an advanced self-learning algorithm. With all of these possibilities on the horizon, it’s hard not to dream of an era on our planet when AI is capable of ridding the world of failure.
And as crazy as that may sound, believe it or not, the United Nations has embarked on a very ambitious endeavor to use AI and satellite imagery to try and collect data that can be used to eradicate poverty by 2030. Using AI’s machine learning capabilities to analyze satellite photos globally in order to create a worldwide poverty map is the first step. Together with other instances where Big Data can help us, like for example in health app development and even battling human trafficking, the future certainly looks more humane, even though it’s being shaped by computers.