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Being curious is one of the most challenging feelings in the world, and having the impulse and thought that drive us in that direction is fulfilling. Because of that, we’ve got the constant development of tools and technologies that are here to help us ease many different and difficult processes.
This is probably the most positive side of technology (no matter what the folks say on the multiple generic and fearful posts on LinkedIn) – is living in the moment of embracing a smarter approach and leveraging the power of artificial intelligence (AI).
Even though, maybe we could say – we are living in the age of doubt, and answering to those doubts is essentially crucial, no matter the field you’re in.
But here are just a few thoughts on how we can use those AI hidden insights to apply them toward better financial business outcomes.
Why use data-driven decisions at all?
Well, the most simple answer is, among many reasons to use those – is that it leads to improved financial decisions. But how, you ask? It certainly comes from one point of logic – in order to understand something and what your customers need and want – you have to use information.
Also, making decisions based on data helps you become more agile and flexible in your approach, and we all want to speed up any process on a more fluent and concise level – right?
Just imagine being able to respond quickly to shifts in the behavior of customers or even changes in the market.
And because you have a crystal clear understanding of what’s driving your results, you are able to make course corrections as required without having to second guess yourself.
Why use those data-driven decisions sprinkled with the help of AI tools? Just being faster and making better decisions is a good enough reason.
And when it comes to business, it can make a great difference between success and failure.
Algorithms are your friends in decision making
And there are a bunch of them. Having a number of different friends adds value to your system.
The same holds true for algorithms, where being exposed to a wide variety of implementations can only be beneficial.
So, picture a trio of strong friends who are AI-powered:
- Machine learning is here to automate financial processes, for example, it can be used to identify fraud in low-performing investments.
- Natural language processing is here to show compassion and understand customer sentiment. This one is here to investigate how customers feel about the company, products, or its services so decision makers can make choices about where to allocate resources for product development or marketing campaigns.
- Utilizing predictive analytics allows one to make educated guesses about upcoming trends. This way, you can make strategic choices about where to invest or how to price products.
Artificial intelligence algorithms can provide precise cash flow forecasts, pinpoint risks, and enhance working capital management by poring over historical data and market trends.
Managing business credit cards and rate optimization
Well, AI helps businesses get the most out of their credit cards by using smart technology, and this technology looks at how businesses use their cards and figures out the best ways to save money. Simple, right?
We will juxtapose the two primary methods of charging for credit card transactions: interchange plus vs flat rate.
Interchange plus means you pay a small fee for each transaction, and the rate changes depending on the type of transaction. A flat rate means you pay the same fee for every transaction, regardless of the type.
Credit card transaction data is analyzed by AI algorithms, which then make recommendations for each business regarding the best payment method to use, as well as important matters such as the most advantageous rewards programs, cash-back offers, and discounts.
AI can even help businesses choose the right type of credit card, like low-interest rate cards for long-term payments or reward cards for people who travel a lot for work.
Low interest rates and loan management with AI
This is one of the goody-goody tricks from AI. As we are all aware, today’s economy is not so certain – so interest rates are a big concern not only for businesses but also for individuals.
Luckily, AI can help with managing money – and of course, making smart decisions about loans.
AI can find and evaluate the best loan options for people by looking at current information like loan rates and terms. And then it gives personalized suggestions for loans that offer the most value to the borrower.
But not only that, AI can also help with existing loans. It keeps track of payments, alerts borrowers if they’re late, and spots any potential problems. AI frees up time previously spent on such menial tasks, allowing loan managers to devote their attention elsewhere.
Sometimes, AI can even negotiate better loan terms, which means lower interest rates and monthly payments for borrowers. It’s definitely a smart choice – use an AI to save money on loan interest or just manage finances much better.
People who are using AI will have an advantage in dealing with the ups and downs of interest rate fluctuations as long as interest rates continue to fluctuate.
Cloud computing for finance management within CPRA
As a result, cloud computing and automation have raised the stakes for financial institutions by making them quicker, better, and more efficient in their work.
These tools, in conjunction with AI, allow the finance department to save time and money while increasing accuracy.
But what is also important to mention? Well, it’s important to note that when collecting data for cloud-based systems, businesses must comply with data protection laws – such as the California Consumer Privacy Act (CPRA), which safeguards individuals’ personal information.
To emphasize the significance of adhering to data protection regulations in cloud computing, consider the fact that failing to comply with the CPRA can result in serious repercussions, such as substantial penalties and fines.
Finance institutions can improve security and productivity by adopting these technologies and ensuring compliance with data laws.
AI possibilities for growth in finance
Well, it is not just about automation. In the field of finance, the analysis of data is playing an increasingly important role in the formulation of sound judgments. AI is useful in the finance industry because there is a lot of complex data, which makes it difficult to understand potential growth areas.
For banks and other financial companies, AI can improve customer service and help detect risky situations. It can spot unusual customer behavior that might be a sign of fraud. But it can also predict which customers might struggle to pay back loans or credit.
Automating processes in the insurance industry, such as handling claims and determining who is eligible for coverage, is one application of AI. Because of this, insurance companies now have more time to devote to other priorities, such as ensuring the satisfaction of their clients (or marketing). Discovering patterns and attempting to anticipate the next actions that a customer may take is another enjoyable activity.
AI is a silver bullet for smarter financial decisions
But also a big hand in the competitive market. No matter where you go and decide what to use as leverage – one thing is for sure: AI is here to help and will stay.
Of course, we are very, very far from any Westworld scenario, but in the financial field, having any advantage and using the right resources is the best thing you can do to stay ahead of an increasingly technological shift.
What’s wrong with having more accurate forecasts and better predictions? Nothing really; just use it within compliance with the laws to identify market behavior and conditions – and you’ll be on your way to success.
Q1:Does AI only benefit large corporations when it comes to finance?
A1: No, the application of AI is beneficial for companies of any size. Financial tools and platforms powered by AI are becoming increasingly accessible, affordable, and flexible. Small and medium-sized businesses can take advantage of these developments.
Q2: Is it possible for AI to completely replace human decision makers in the financial sector?
A2: Artificial intelligence helps improve decision making by providing useful insights and automating mundane tasks. However, human judgment and the application of relevant expertise are still necessary when it comes to comprehending the insights generated by AI and making final decisions.
Q3:How exactly does AI address concerns about safety in the context of financial decision making?
A3: Artificial intelligence systems are built with the intention of protecting data and warding off cyberattacks. Decision-makers can rely on artificial intelligence-driven fraud detection algorithms to spot potentially fraudulent activity and ensure the security of financial transactions.
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