AI Integration in Financial Services

AI has both opportunities and problems, much like other Fintech industries. The growing use of AI technology in capital markets is anticipated to lower entry barriers for a large number of people who may not have had access to financial markets in the past, hence promoting financial inclusion. AI research has been heavily funded by some of the most valuable large tech companies in the world, including Apple, Amazon, Tencent, and Alibaba. However, as Robert Shiller's comments at the 2018 Davos Forum show, AI is a disruptive technology that also carries a lot of uncertainty.

Machine Learning & Hedge Funds

ML is being used by the UK Financial Conduct Authority (FCA) to assist people in managing their current accounts. Roughly 9% of hedge funds create extensive statistical models using machine learning.

Digital-Only Banks & Tech Competition

Due to their all-online operations and frequently cheaper overhead expenses than traditional banks, these banks are able to provide their clients with more favorable interest rates, fees, and other terms. Furthermore, digital-only banks frequently employ state-of-the-art technologies to improve the convenience and usability of banking. To remain competitive with the emerging digital-only banks, traditional banks must also make investments in technology and digital solutions.

Customers are benefiting from more creative solutions and an improved customer experience as a result of this competition.

Open Banking & Data Sharing

Open banking has developed gradually as a result of a confluence of shifting customer preferences, legal reforms, and technology breakthroughs. The Consumer Data Right (CDR), which was put into effect by the Australian government, mandates that banks give their customers' data to approved third-party suppliers.

With the API Exchange (APIX) platform, which allows financial institutions to share data and services with outside providers, the Monetary Authority of Singapore has been encouraging the usage of open APIs in the financial industry.

Through the Open Banking Standard of Canada (OBSC) and the Financial Data and Technology Association (FDTA), the Canadian government has been encouraging the usage of open banking. Additionally, some third-party providers are beginning to operate in the nation, and banks are beginning to embrace open banking.

Historical and Modern Evolution

The world's first bank was founded in 1656 and was called the Bank of Sweden. It was produced in response to a government attempt to develop a more effective financial management system for Sweden.

With the introduction of new technologies and regulatory changes in the 20th century, the banking sector experienced substantial changes. Banking services are now much more accessible and efficient thanks to the development of computers and the internet.

Rise of DeFi and Automation

DeFi lending allows users to freely hold money and access greater interest rates, which puts it in competition with bank deposit and savings accounts. DeFi exchanges connect liquidity networks like SMTP connects email providers, enable trading as easy as sending an email over the internet, and have the ability to transform centralized exchanges into "email front-ends" of a unified capital markets system.

Prior to DeFi's open banking data APIs, capital markets were not as efficient as they are now thanks to DeFi's robo advisor return automation tactics. Anyone with an internet connection, wherever in the world, can offer these services to anybody else thanks to DeFi.

Platforms focusing on financial data automation, such as The Capital Box, contribute to this ongoing transformation by bridging AI and financial research.