Financial technology or FinTech refers to new technology designed to automate and improve the delivery of financial services. Among the technologies driving this finTech revolution are blockchain and AI. We’ve already seen the technologies used in healthcare, supply chain and logistics, online video (AIWORK), and finance.
The use of blockchain and AI in finance has enabled improved transparency, better data management, efficiency, and greater security. Let’s understand how.
What Is FinTech 2.0?
FinTech 2.0 is a term that describes new technology that seeks to improve and automate the delivery of financial services to users. It is utilized to help companies, consumers, and business owners to manage their financial operations and processes better by utilizing specialized software and algorithms used on smartphones and computers. When it first emerged, FinTech was confined to the back end of financial institutions; however, recent years have seen a clear shift towards consumer-oriented services. As a result, FinTech encompasses various industries such as education, fundraising, non-profit, and retail banking. It also includes the development and use of cryptocurrencies such as Bitcoin.
The current FinTech landscape includes the following.
- Open banking
FinTech And Technology
FinTech utilizes various new technologies such as machine learning, artificial intelligence, blockchain, predictive analytics, data-driven applications, and marketing techniques. Learning apps using AI will be able to learn user habits and preferences. Using chatbots and AI to assist customers with basic tasks and queries also helps cut costs and make processes more efficient.
How Blockchain And AI Are Shaping FinTech 2.0
When we hear the word “blockchain,” our minds immediately register cryptocurrencies like Bitcoin. However, a blockchain is so much more. It is essentially a shared, immutable ledger that facilitates the storage of data through the process of cryptography. Meanwhile, AI refers to machines that use data and machines to mimic human intelligence and perform tasks typically requiring human intervention. AI encompasses several fields, including machine learning and deep learning, which enable it to make accurate predictions using AI algorithms and data. AI can also learn from the data provided to it, getting smarter over time.
Blockchain technology brings unprecedented transparency to finance, enabling more users to access financial markets through smart contracts, decentralized finance (DeFi), and smart contracts.
Let’s understand the benefits of blockchain and AI, which could be implemented in FinTech.
Blockchain and AI improve the efficiency of financial systems, bringing greater value to customers by combining the two technologies and driving business processes, allowing financial institutions to maximize returns.
Better Customer Service
Banking processes could be faster and more convenient. A simple account can take several days to collect information from sources. Blockchains allow banks to store information in a decentralized manner, while AI algorithms can scan data and access the required information. This allows institutions to offer customizable services to customers.
Bank transactions are slow and expensive compared to blockchain-based cross-border because the latter does not require third-party authorization. Remittance costs for blockchain transactions are only 2-3%, while traditional banks charge anywhere between 5% to 20%.
Blockchain and AI enable trust, removing friction from multi-party transitions, thus improving the overall speed of transactions. Additionally, with data stored on the blockchain, users can easily grant consent for access to data, speeding up processes.
Thanks to the blockchain, transactions or transaction data cannot be tampered with. The blockchain’s security helps reduce fraudulent transactions and enhance fraud detection. Adding AI can help detect any transaction anomaly by sifting through massive data sets and looking for irregular patterns.
What Does The Implementation Of Blockchain And AI Mean For FinTech?
The current version of FinTech is highly centralized. Blockchain and AI can be harbingers of change, focusing on more holistic solutions, resulting in better transparency, security, and transaction speeds. Additionally, access to DeFi means a larger pool of investors resulting in more data. Large amounts of data are almost only possible to process efficiently with AI. The use of blockchain improves transparency, while AI can scale processes, accelerate transaction speeds, and extract insights from data.
How AIWORK Is Using Blockchain And AI
AIWORK was one of the first projects to acknowledge the potential of blockchain and AI. The project is an open-source blockchain protocol developed using a network of human experts and AI computing resources, enabling the creation of normalized and enhanced metadata for video content. The protocol facilitates a marketplace consisting of crowdsourced human experts that verify and validate data. AIWORK also allows developers to create decentralized applications on the platform, while users can also run AI nodes or provide data and earn AWO tokens as a reward.
The project also has its trademark ContentGraph, which uses AI to define a confidence score for video content based on attributes such as language, hate speech, violence, guns, etc., and assign suitability scores.
Blockchain and AI are set to play a crucial role in the advancement of FinTech 2.0, enabling faster transactions, better security, cheaper payments, and an overall better customer experience. We are already seeing the impact of these technologies in a host of industries. However, the technologies must be integrated carefully with existing banking operations.