OpinionAI transformation doesn’t stop at big financial institutions
Opinion
AI transformation doesn’t stop at big financial institutions
"AI-based financial services represent a significant opportunity for Israeli startups whose full potential even artificial intelligence cannot yet imagine," writes Benjamin Avraham, CEO and founder of the AI-based fintech startup okoora
Artificial intelligence has revolutionized the decision-making process in financial institutions, with automation, advanced predictive capabilities, and personalization based on massive data analysis. But the AI revolution has not stopped just at large financial institutions - it has permeated and spread in several other directions.
The concept of 'banking as a service' (BaaS) now allows companies of all sizes and types to become providers of financial services for all purposes, without large investments. This trend has enriched the portfolio of AI-backed financial services available to private consumers and businesses.
Moreover, small and medium-sized businesses can now instantly use AI-based independent financial applications offered as cloud services (in the SaaS model), upgrading their financial decision-making capabilities. This ability aligns with the desire of these businesses to be freed from dependence on banks. For example, a survey by fintech giant Airwallex reveals that approximately 82% of small and medium-sized businesses are considering replacing the financial services they receive from banks with other service providers.
AI-based financial services have become more accessible and have expanded in their capabilities and influence on the decision-making processes of banks, insurance companies, small and medium-sized businesses, and their customers.
For instance, according to a study by Allied Market Research, the financial volume of algorithmic trading reached approximately $12 billion in 2020 and is expected to grow to more than $31 billion in 2028. AI-based algorithms perform transactions automatically according to predefined criteria such as market trends, price fluctuations, and risk factors.
Artificial intelligence has also completely changed the way financial institutions manage risks and how businesses that use financial applications operate. Analysis of rich information from many sources allows banks to identify future risks in dynamic markets and prepare for them. Analyzing customers' personal information makes it possible to immediately identify their level of risk and approve within seconds a loan, mortgage, credit limit increase, insurance policy, or avoid approval.
Furthermore, AI has enhanced the abilities of financial institutions to detect fraud. Adding AI algorithms now makes it possible to identify movement patterns, data anomalies, and suspicious connections between people and companies, enabling proactive identification and prevention of fraud before it occurs.
While artificial intelligence has transformed financial decision-making, the need for human control over automated processes and the need of many customers for advice and support from human representatives should not be ignored. For Israeli startups, AI-based financial services represent a significant opportunity whose full potential even artificial intelligence cannot yet imagine.
Benjamin Avraham is the CEO and founder of the AI-based fintech startup okoora.
