Back
Labeling

Fintech and NLP: Revolutionizing the Finance Sector

Ananya Avasthi
October 8, 2021

Artificial Intelligence (AI) and Natural Language Processing (NLP) procedures are utilized in numerous spaces, including medication, finance, and legal sectors, to name a few. NLP has made tremendous advances lately, and its use has expanded extensively inside the monetary area. What is Natural Language Processing? It is simply an off-shoot of AI that assists the system in understanding 'Natural Language' or human language. Every language has specific nuances that humans are used to catching.

These exceptions and grammatical etiquette would go right past a computer, which uses a straightforward programming language. So, NLP comes along to help the AI by using tools to understand the basic techniques of word definition, phrases, sentences, texts, and syntactic( knowledge of word meanings and vocabulary) and semantic processing (understanding the combination of terms). It also develops applications such as machine translation (MT), question-answering (QA), data retrieval, discussion, document production, and recommendation programming to name a few. 

There are many promising explorations and late forward leaps into Natural Language Processing (NLP) and Artificial Intelligence (AI). What's more, these patterns are especially applicable in the finance sector. Over the years, text examination has become robotized and continually expanding exponentially. One could likewise work on human responsiveness. Nonetheless, n-number of possibilities have developed the openness of the organization's clients to the new progressed NLP methods will decidedly affect how the clients associate with the organization.

NLP and Fintech

There are certain expectations from one's particular bank, insurance company, and credit union as a consumer. One would appreciate the tracking of their real-time transactions, supervised management of their assets, and the opportunity to settle any issue online.  To make that reality, financial services must be equipped with innovative technologies that demonstrate speed, intelligence, and autonomy. 

AI gives machines human-like Intelligence by enabling them to perform tasks akin to a superpowered human: This is achieved mainly by its major sub-domains: Machine Learning (ML) and Natural Language Processing (NLP).

NLP in Fintech has Two Primary Use Cases

It must understand the way humans speak and extract its meaning:  This means recognizing intent & coming up with an appropriate reaction like requesting help, passing a claim, etc. NLP assists in turning unstructured data in databases and documents into structured data and extracting relevant insights through pattern recognition (text mining). 

Here are a few use cases where AI and NLP are influencing the FinTech world:

-NLP assists in evolving the chatbot into virtual assistants and counselors.

-Enriching the chatbots with advanced Big Data analytics.

-Making communication seamless and precisely like a human communicator.

-Detecting fraud

-Segregating customers into groups & improving relevant product offers.

-Minimizing administrative work & automating separate tasks and whole domains.

The areas where users can apply NLP:

Customer Service

"Conversational banking" is a new concept, and it means a drastic shift from simple chatbots to well-equipped digital assistants. To set oneself apart from the competition, invest in virtual assistants with advanced capabilities. They should be able to process context, analyze text sentiment, and perform predictive analysis. NLP companies assist these chatbots with functionality, essentially helping them translate user queries into information that automated systems can use for appropriate responses. 

-Counseling consumers on bank account management.

-Sending an alert when approaching the spending limit.

-Flagging payments for anomaly detection. 

InsurTech

Advanced specialists and NLP-based client support are the upcoming players in the worldwide protection market. Insurtech means to use technology innovations designed to bring out savings and efficiency from the current insurance industry model. Insurtech is a combination of the words "insurance" and "technology," influenced by the term fintech. Artificial intelligence is a big reason why Insurtech has become successful. Machine learning-powered applications can process the colossal amounts of data required to create improvements in efficiency and effectiveness. There are multiple applications for Insurtech within this sector: This includes personalized policies, more possibilities for small business policies, and customer-facing applications.

RegTech

RegTech technology is a tool used by financial institutions and FinTech firms to remove regulatory risk and minimize the costs of compliance issues: This is still in the making and has a very narrow spectrum, so it cannot be utilized commercially. This up and coming age of artificial intelligence instruments with NLP will include: 

-Agreement survey.  Performing a full-scale records audit takes a few seconds, which previously required 360,000 hours of routine work.

-Administrative examinations. It helps in detecting tax evasion, potential anti-money laundering (AML), and combating the financing of terrorism.

NLP and Fintech are coming up with innovative solutions that assist the financial sector in creating better policies and protecting assets. Combined with machine learning, many financial processes can be fast-tracked, leaving humans to focus on more intricate matters.