Blockchain and AI Technology: A New Paradigm for Financial Services

Ever caught yourself marvelling at the marvels of modern technology? In the financial world, there's a buzz that's hard to miss. The fusion of Blockchain and AI is not just a trendy topic—it's redefining the contours of financial services. Where knowing the fusion is important for many others, it’s equally valuable to learn for global expatriates, including the 32 million Indian diasporas. These Indians owe the swiftness, ease, and convenience they enjoy each time they send money to India from overseas to the rapid technological advancement taking shape, which is one side of the story. The fusion of blockchain and AI is the other side that they ought to learn.

In the days of yore, technological advancement in different fields would offer great help to the users in a specific field. But nowadays, every advancement in almost any field impacts life and behaviours as a whole. Blockchain is one such step the technology has taken that shook the entire world of finance and also bore a deep impact on the financial behaviours of people.

Satoshi Nakamoto is credited with creating the first modern cryptocurrency and the Blockchain infrastructure. For public use, it was launched in 2009.

How Blockchain Works?
A Blockchain is a ledger or database shared and distributed among a vast computer network’s nodes. They are known for their critically important role in cryptocurrency systems to maintain a decentralised and secure transaction record. They are not limited to cryptocurrency uses alone.

Blockchain is used to make data in any industry immutable. The term immutable, in this context, means the inability to be altered or manipulated.

Understanding Artificial Intelligence (AI)
Artificial Intelligence (AI) is the ability of a computer or a robot that is controlled by the computer to perform tasks that are known to be performed by intelligent beings or were associated with human beings until the launch of AI recently.

lockchain shot to prominence through its role in cryptocurrency. But its use has now gone far beyond cryptocurrency and the associated data.

Financial Services – The Current Status
Although AI, in the strict context of its definition above, has not covered every aspect and operation taking place in the financial world, it, indeed, has had a deep impact on how financial operations are carried out.

For example, for Indian migrants who earn a living abroad, AI has created ease and convenience to send money across borders. They can use several smartphone apps or log into the official websites of some of the most reputable companies, like ACE Money Transfer, to deliver funds within a few clicks.

Impact of AI on Financial Services
The first impact of AI on financial services was to dilute the monopoly of the banks on remittance operations. Since the focus is on Indian migrants and educating them about the impact of AI on how they transfer funds across borders, remittances within the financial world will stay in the limelight.

After diluting the power and monopoly of the banks in the remittance industry, AI birthed the alternatives to serve the same purpose.

The feathers in AI’s cap in the remittance industry are as follows.

• AI has added to the speed and efficiency of the process of delivering funds
• The incidence of fraud resulting from technology lapse has substantially decreased; the margin for human error, however, remains
• Costs involved in the process have been reduced substantially through AI
• AI has also increased customer engagement by increasing their satisfaction threshold
• AI has also helped increase financial inclusion in societies where financial inclusion was less until the advent of AI

Major Challenges Faced by Financial Institutions
Technological advancement comes and brings convenience, but all of the comfort every technological advancement brings with it comes at a cost. In the financial world, this cost comes in the shape of the following few challenges.

Scalability Challenge
The scalability challenge refers to the ability of AI to expand and grow. It also means the ability of AI to cater to the changing and evolving needs and requirements of the migrants who want something new in their every money transfer back home.

For example, despite being the leading financial institution worldwide, the banks still face the scalability challenge in their remittance operations because they are unable to cater to the ever-evolving needs of the customers.

Regulatory and Compliance Challenges
Every service, to be legal, has to work within the regulations defined and set by the regulatory authorities of a country. For example, if Indian migrants were to choose ACE Money Transfer to send money to India online, they would have to see if the firm operates within the financial framework laid out by the regulatory authorities, which are the central banks and finance ministries, given the remittance services the firm offers.

This regulation and compliance are a big challenge because certain restrictions can hinder operations and expansion.

Integration Challenges
Antiquated mobile apps and outdated mobile experiences are another grave challenge for financial firms because customers demand something new every single day when they wish to send money back home.

A fascinating experience of today may cause ennui tomorrow.

Therefore, integrating the latest technology in financial operations and then educating customers about it and ensuring a smooth transition to the new methods from the old is a big challenge.

Real-world Applications and Success Stories in the Financial World
The financial world does not work in a vacuum. It breeds certain applications and success stories in the process of its evolution spanning over centuries. The following are essential to look at in this context.

Blockchain Integrated in Banking Services
Some banks worldwide are integrating Blockchain in their financial services because, as mentioned earlier, Blockchain ensures transparency in its services. And since the database is shared with millions of users at once, it makes manipulating the data impossible for all.

AI Integrated in Insurance Services
Insurance services are a complicated matter involving one’s hard-earned money. It can involve many discrepancies in the process of getting insurance in different areas. The integration of AI in insurance services can help in the following few ways.

• AI in insurance services can detect anomalies
• It can serve as an outlier analyst. It means that AI can detect if a high credit card score is genuine or fake
• AI, through its Natural Language Process (NLP), can detect fraud and tell if a text or email is human- or machine-generated
• Biometric authentication is made possible only through AI

Investments and AI
Like insurance, investments are another tricky business. One can fall prey to sight-alluring ads and media campaigns to encourage one to make investments. It can land one in financial trouble. But with the help of AI, one can seek advice for investment opportunities without any interest involved that one has to endure while seeking help from professional investment experts.

The Future of Financial Services with Blockchain and AI
So long as the replacement of Blockchain and AI does not push these into insignificance, both of these will likely reign supreme while enjoying a tight grip on the AI-driven future.

Here are a few areas in which the impact of both AI and Blockchain will be more visible than elsewhere.

Future Evolution of Remittance Services
AI and Blockchain are impacting remittance services in the years ahead in the following few ways.

• Fintechs and Challenger Banks
• Cryptocurrency and Blockchain (explained above)
• Mobile Money Services
• Neobanks
• Payment Gateways
• Microfinance Institutions

Creation of New Financial Models
Some of the names listed above, like Neobanks, Challenger banks, and mobile money apps, are birthed by AI and are remodelling traditional banking models and services. These are entirely based on AI and are revamping how old financial models serve people.

Furthermore, most of the existing models are also driven by AI, but the models just named above are likely to throw them into oblivion soon enough.

AI and Financial Inclusion
Everyone has to use banking services at least once in their lifetime, if not regularly. And given that they do not cross paths with banks and other financial institutions regularly, they remain unbanked. The reasons are aplenty.

But AI and Blockchain and the trust these financial technologies are reinforcing are bringing more and more people into the fold of banks and financial institutions, leading to increased financial inclusion.

Wrapping Up
Every global money transfer is being deeply impacted by the advent of Blockchain and AI, as is sufficiently evident from the preceding discussion. Therefore, Indian migrants need to stay updated about the emerging trends ensuing from these technologies and also exhibit the necessary flexibility to adopt these trends and adjust accordingly to derive optimal benefits. Where several other resources can help you stay updated, you can check ACE Money Transfer’s website or social media platforms to get insight into what’s new in the fusion of blockchain and AI.

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The reader is further advised that Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.

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