Fintech has produced a lot of user-friendly apps and platforms in the past decade. Most banking, payment, and investment services are now digital and hassle-free.
From sending money to investing in stocks, bonds, or mutual funds, users can achieve day-to-day financial tasks in just a few clicks, across devices and almost anywhere. It was unthinkable even in the early-2000s.
But amidst the marvelous progress, users became the products on ‘free’ apps and platforms. They paid for the convenience with their data — the ‘most valuable commodity’ for big corporations.
The dominance of centralized frameworks and attract-extract business models is the key factor underlying this situation. It presents systemic security risks, as the recent Evolve Bank data breach demonstrated.
More importantly, users’ privacy, autonomy, and financial freedom are at stake. And it can worsen with the increasing AI adoption as financial systems will become more data-hungry.
Yet AI is inevitable and fintech can’t afford to underutilize its transformative potential. Integrating AI with decentralized, user-empowering tech like blockchain is the solution. It’ll make fintech truly user-centric and not merely user-friendly.
AI is a two-edged sword for finance
The financial services industry is one of the world’s biggest adopters of AI. Led by Capital One, JP Morgan Chase, etc., finance companies invested roughly $35 billion in AI in 2023.
Currently, the global market cap of AI finance is $42.83 billion with over 40% of financial institutions using Generative AI. This could result in a $200-340 billion value addition by 2023 — about 3-4% of the industry’s total revenue.
Fintech is indeed moving in this direction. Robinhood recently acquired Pluto to integrate AI tools that’ll help users make ‘informed decisions swiftly and confidently’ while trading.
Likewise, Softbank — despite losing 99% of its valuation during the dotcom bubble burst — is super bullish on AI. So much so, it has decided to go all-in. Profits from its computing and semiconductor development businessfuelled this move.
The jury is out on whether AI is a bubble. But either way, one can’t sensibly deny the massive improvement AI has recently undergone.
Leopold Aschenbrenner claims AI went from ‘preschooler’ to ‘smart high-schooler’ in just 4 years and thus Artificial General Intelligence (AGI) by 2027 is quite possible.
