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Difference Between Fintech and AI

Artificial Intelligence (AI) has become a major component of not only the Insurtech and Fintech sectors but also marketing, healthcare and business intelligence. With a prediction of massive year and taking over most industries, AI is preferred for making tasks efficient, lowering costs and delivering the best services while simulating human behaviour. With Fintech aiming to disrupt financial services, what better partner than AI? With the application of AI requiring some sort of payment, these two are set to work hand in hand. They, however, have differences.  

What is a Fintech?

Short of Financial Technology, fintech refers to the use of technology in terms of new processes, business models, products or applications to improve financial operations. By utilizing specialized algorithms and software, businesses are able to better manage their financial processes and operations. 

Key areas that have applied fintech to improve their operations include banking services, insurance, risk management and trading. Although the services may originate from independent providers, the interconnection is enabled through open banking and APIs. 

Practically, fintech is applied in tasks such as making deposits with a smartphone, money transfers and any other activities carried out without the assistance of a person. Among common terminologies in fintech include blockchain, big data, robotic process automation and artificial intelligence. 

Fintech is currently used in crowdfunding platforms, mobile payments, cryptocurrency, blockchain and insurance and budgeting apps.

What is an AI?

Short of Artificial Intelligence, this is the simulation of human intelligence in machines to mimic human actions or any machines that display human beings’ traits, more-so problem-solving traits. 

The three cognitive skills AI is built on include:

  • Learning processes
    • – This focuses on acquiring data and how to make it actionable. It is built on various rules, commonly referred to as algorithms which provide step by step instructions on the completion of each task. 
  • Reasoning processes
    • – This focuses on choosing the correct algorithm for each outcome. 
  • Self-correction processes
    • – This ensures the continuous provision of the most accurate outcomes. 

Although mostly associated with robots, the goal of AI is to learn, reason and executive tasks in a human manner from the simplest to the most complex tasks. To benefit many sectors, AI is constantly advancing, with machines that optimal character recognition machines or machines used to calculate basic functions being outdated. 

The possibilities of AI are endless, from self-driving cars to dosing dugs in different treatments. Examples of popular AI use today include Siri, Alexa, Tesla, Cogito, Amazon, Netflix and Pandora. 

Similarities between Fintech and AI

  • Both aim at improving the efficiency of business operations

Differences between Fintech and AI

Definition

Fintech refers to the use of technology in terms of new processes, business models, products or applications to improve financial operations. On the other hand, AI refers to the simulation of human intelligence in machines to mimic human actions or any machines that display human beings’ traits, more-so problem-solving traits. 

Importance

Fintech enables businesses to better manage their financial processes and operations. On the other hand, AI helps businesses execute tasks without the need for human performance. 

Application

Fintech is used in crowdfunding platforms, mobile payments, cryptocurrency, blockchain and insurance.  On the other hand, examples of platforms that use AI include Siri, Alexa, Tesla, Cogito, Amazon, Netflix and Pandora. 

Fintech vs. AI comparison Table

Summary of Fintech vs. AI

Fintech refers to the use of technology in terms of new processes, business models, products or applications to improve financial operations. The integration of fintech in business processes and operations has become popular as organizations are able to better manage their financial processes and operations. On the other hand, AI refers to the simulation of human intelligence in machines to mimic human actions or any machines that display human beings’ traits, more-so problem-solving traits. It helps businesses execute tasks without the need for human performance. 

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References :


[0]Millie S & Bartoletti I. The AI Book: The Artificial Intelligence Handbook for Investors, Entrepreneurs and FinTech Visionaries. John Wiley & Sons Publishers, 2020https://books.google.co.ke/books?id=oE3YDwAAQBAJ&printsec=frontcover&dq=difference+between+fintech+and+artificial+intelligence&hl=en&sa=X&ved=2ahUKEwjGit_OhpvqAhWSyoUKHWJWAKcQ6AEwAHoECAEQAg#v=onepage&q=difference%20between%20fintech%20and%20artificial%20intelligence&f=false

[1]Fischer F & Arslanian H. The Future of Finance: The Impact of FinTech, AI, and Crypto on Financial Services. Springer Publishers, 2019. https://books.google.co.ke/books?id=u9KiDwAAQBAJ&printsec=frontcover&dq=difference+between+fintech+and+artificial+intelligence&hl=en&sa=X&ved=2ahUKEwjGit_OhpvqAhWSyoUKHWJWAKcQ6AEwAXoECAAQAg#v=onepage&q=difference%20between%20fintech%20and%20artificial%20intelligence&f=false

[2]Tham T & Gupta P. Fintech: The New DNA of Financial Services. Walter de Gruyter GmbH & Co KG, 2018. https://books.google.co.ke/books?id=UBiBDwAAQBAJ&pg=PA74&dq=difference+between+fintech+and+artificial+intelligence&hl=en&sa=X&ved=2ahUKEwjGit_OhpvqAhWSyoUKHWJWAKcQ6AEwAnoECAMQAg#v=onepage&q=difference%20between%20fintech%20and%20artificial%20intelligence&f=false

[3]Image credit: https://live.staticflickr.com/1952/44405376514_f832e62fed_b.jpg

[4]Image credit: https://live.staticflickr.com/65535/49393885627_8b461bdfe0_b.jpg

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