Fintech AI Chatbot: Applications and Advantages in 2024

The advent of AI has triggered a revolution across the world. Today, every industry is leveraging the power of AI and its applications. Chatbots are one of the diverse applications that have proved their significance in the modern world. Telecom, manufacturing, education, and even the finance sector are harnessing chatbots for their operations.

Statistics suggest that the chatbot market is expected to hit the $15.5 billion mark by 2028. The calculated CAGR between 2023 to 2028 is 23.3%. The advent of AI generative models primarily backs this steep rise in the chatbot market. Thanks to the development of generative models, chatbots' Natural Language Processing capabilities are enhanced.

On top of that, the introduction of GPT-4 can help them easily interpret user behavior and preferences. These powerful capabilities of chatbots have several applications in the Fintech sector. Let's read ahead and unravel those applications.

What are AI-based Chatbots?

AI chatbots are powerful, automated programs that use Artificial Intelligence to talk with humans through text or audio input.  These chatbots are designed to simulate human-like conversations and can operate independently with Natural Language Processing (NLP).

Chatbots have become massively popular in various industries, including Fintech, due to their ability to provide efficient and personalized customer support.  AI chatbots can be trained to understand and respond to user queries, offer recommendations, and perform tasks like writing stories or programming code.

Here are some of the crucial features of an AI-powered chatbot!

1. Contextual Responses

One of the best features of an AI chatbot development is contextual responses. Unlike simple chatbots, AI-based chatbots should understand the context of a conversation. This makes the conversation more human and helps the chatbot provide relevant and contextual answers without asking any validating questions. With this, users can ask follow-up questions seamlessly.

2. Human Intervention

Though AI chatbots are powerful, they are still evolving. Therefore, the chatbot should be trained to allow human intervention if It fails to understand the urgency and complexity of the query. An example of this can be a chatbot that places orders for your required items. The user should be able to add the items manually if the chatbot does not understand the request.

3. Omnichannel Support

To capture maximum support and sales opportunities through user engagement, your chatbot should support several channels, such as websites, mobile apps, social media platforms, and messaging services like WhatsApp, Apple Business, Facebook, etc. Bankia, the fourth largest Spanish bank, uses WhatsApp for an automated loan approval process.

4. Robust Data Security and Privacy

The finance sector holds many sensitive user data, such as credit card information, passwords, login credentials, and whatnot. When a user is interacting with the AI chatbot, it is possible that a hacking tempt can intercept the data. This demands a chatbot that has powerful security and privacy features. For data security, an AI-backed chatbot should have end-to-end encryption, multi factor authentication, authorization, self-destruct messages, etc.

5. Application Programming Interface

An excellent feature of an AI chatbot is the availability of an API. An application programming interface allows the chatbot to be integrated with other software like a CRM, databases, etc. With the API, a chatbot can assist users in a more convenient and customized way. It becomes easier to look for real-time data and present it quickly. This can be helpful if a user tries to access their bank balance information.

Use cases of AI chatbot for fintech

Fintech AI chatbot use cases include offering personalized advice, real-time fraud detection, streamlined loan assistance, round-the-clock customer support, and efficient account management.

Personal financial assistance

AI chatbots provide tailored financial advice, analyzing users' finances to offer budgeting tips, savings plans, and investment recommendations. They help users make informed money decisions and work towards financial goals.

Fraud detection and prevention

Chatbots monitor transactions in real time, alerting users to suspicious activities and verifying unusual transactions. They offer immediate responses to potential security threats, helping protect users' financial assets.

Loan and credit assistance

AI assistants simplify the lending process by pre-qualifying users, explaining loan terms, and guiding them through applications. They also provide credit score information and advice on improving creditworthiness.

Customer support and service

Chatbots handle a wide range of financial inquiries 24/7, from account balances to product explanations. They offer quick resolutions to common issues, improving customer satisfaction and efficiency.

Account management

These AI tools streamline financial tasks, allowing users to transfer funds, pay bills, and update account information through simple conversations, enhancing user experience and operational efficiency.

Benefits of AI chatbots for the fintech sector

Analyzing the traditional ways of banking, there were fixed banking hours in which very few users could transact or resolve their issues. With the use of chatbots and other digital services, user issues have dipped, and the adoption rate of Fintech services has also increased.

Statistics suggest that India achieved the Fintech adoption rate of 87% recently. Moreover, as of 2022, 65.3% of Americans use digital banking. Let’s read ahead and find out how the Fintech sector can leverage the power of AI Chatbots.

1. 24x7 Support

One of the primary utilities of an AI chatbot is 24x7 Support. In today's internet-connected world, users demand 24/7 availability of almost every service. In the Fintech sector, the use of mobile apps has sufficed this demand to some extent. However, there are still some processes that require automation. For example, loan application processing can be a hectic job. And an AI-based chatbot can help.

With an AI chatbot packed with powerful algorithms, the loan application approval process can be automated. One example is Bankia, which uses WhatsApp for the loan approval process. The best thing is that users can use this at any time.

2. Time and Cost-effective

Another critical benefit of AI chatbots in Fintech app development is time and cost savings. As users don't have to stand in long queues just to know the balance and status of their application, a lot of time can be saved. Moreover, from the business perspective, the need for hiring customer support representatives will decrease in the future due to chatbots, hence saving operational costs.

As per stats, Fintech businesses saved around $7.3 billion in operational costs by implementing chatbots. Furthermore, using chatbots also saved around 826 million hours of interactions.

3. Personalized Financial Advice

Expenses can be of various types, and it can be tough to track them all daily. However, using an AI chatbot, your customers can get personalized financial advice and focus on budget planning. As the chatbot has the data regarding all the expenses, income, etc., it can use AI to analyze it and provide valuable insights.

Chatbot can remind the users about their expenses based on their transaction history. Further, users can be more mindful while investing or spending their money unreasonably beyond their budget. Qapital is an awesome example of a budgeting app. It uses AI to analyze expenses and provide personalized financial advice to the users. Trim is another example.

4. Faster Inquiries and Payments

You don't have to go to the bank if you need to know your bank balance before spending somewhere after dark. Just open the bank website or app and talk to the chatbot. Almost every financial business has a website today where you can get answers to all your basic inquiries. Moreover, making payments with the help of chatbots is also a new trend. 

5. Targeted Ads

Data is the most valuable asset for a business. With the use of customer data and their usage patterns, AI chatbots can run data analysis which inturn can be helpful for targeted ads related to product promotions. Therefore, chatbots can help strengthen your marketing strategy. You can also use ads in chatbots to upsell other financial products.

6. Fraud Detection

Fraud detection is one of the most utilitarian aspects of AI chatbots. With access to user’s spending behavior and user accounts, AI can detect any suspicious activity and inform the users about it. Moreover, several authentication and authorization restrict chatting with an AI bot. Someone who tries to use the bot for fraud will get caught.

Kount is an AI chatbot used for fraud detection.

Conclusion

In today’s brilliantly connected world, availability is a scarce commodity. If you are not available for your customers, no matter what your business is, your business is less likely to succeed. However, if you use the available technology to the fullest, you can achieve your goals.

AI chatbots are the new trend in the market that is taking it by storm. Every industry sector is empowering itself with AI chatbots, and so should you. If you are one of those Fintech firms struggling to keep up your customer base numbers.

Book a 45-minute free consultation with our AI experts today. You will get a complimentary roadmap/strategy leveraging AI chatbot for your fintech business.