A significant innovation in the finance industry, machine learning technology trains computers to answer questions based on the patterns produced by algorithms within datasets. Banks, insurance companies, brokerage firms, and other financial institutions have started applying machine learning in their daily operations.
1. Process Automation
Machine learning is used for reducing manual processes, automating repetitive activities, and improving accuracy. For instance, using a chatbot speeds up the process of answering frequently asked questions about a product or a service.
2. Risk Management
Machine learning can be used to improve the process of determining the creditworthiness of loan applications by analyzing existing information against changing market trends. Machine learning can also help banks improve risk models for stress testing.
3. Fraud Detection
Through machine learning algorithms, computers can be taught to identify non-legitimate transactions that are too subtle for analysts to spot. The machine will produce an accurate behavioral pattern recognition process to flag or reject suspicious activity that may indicate bank fraud.