From Chatbots to Robo-Advisors: The Role of AI in Fintech Mobile Apps

Artificial Intelligence has become very popular in recent years, taking our world by storm. No wonder, as it is a changing technology that can be incorporated into many fields of various industries and even our everyday life. One of the branches that AI has overtaken is Fintech. Its usage in this segment of IT brings many benefits, which you can read about in our blog postAI Disruption in the Financial Sector: Trends and Insights.

Therefore, AI-powered features have transformed the fintech industry, enabling mobile apps to provide personalized financial services to users. From chatbots to robo-advisors, these features have greatly improved the accessibility and convenience of financial services on mobile devices. To explain this topic more in-depth, we prepared an article for you. In the following text, we explain the basic terms concerned with fintech and AI-driven solutions in Online banking. To give you an even more comprehensive picture, we also prepared the upcoming trends in this field and a guide on how to build a fintech mobile app. Read the post and acquire all the essential information for your success.

What is Mobile Fintech App

Do you remember staining in long queues in banks to make a transfer or take out your money? Maybe you remember taking out your money to repay your friend. Well, life no longer looks like this. With the shifts in financial technology and mobile financial app and developments, the bank scenarios from the past have drastically changed.

Fintech, as an online banking industry, is driving a revolution by developing innovative products and services that are more accessible, convenient, and user-friendly. This includes cutting-edge technologies like robo-advisory and blockchain-based platforms, which are changing how financial services are delivered. The resulting increase in competition has led to better products and services at lower prices while also enhancing convenience, accessibility, and security for both consumers and businesses. Moreover, traditional financial institutions and fintech companies are increasingly collaborating, further fueling Fintech's impact on the industry and shaping the future of finance.

banking mobile apps are one part of it; through them, customers can perform financial transactions, including managing their accounts, paying bills, and transferring funds, using their smartphones. With this service available around the clock, users can enjoy the convenience of banking anytime and benefit from enhanced data security features.

Types of Fintech Mobile Apps:

You can better understand what mobile banking apps are by seeing their different types and everyday usage. Here are the main types on the market used by most people:

• Mobile banking apps: Apps that can be downloaded onto a smartphone or tablet and used to access account information, transfer money, pay bills, and more.
• SMS banking: A service that allows customers to access banking services through text messages sent from their mobile phones.
• Mobile web banking: A mobile-optimized version of a financial institution's website that can be accessed through a mobile browser.
• Mobile remote deposit capture: A service that allows customers to deposit checks using their mobile device's camera.
• Mobile payments: A service that enables customers to make payments using their mobile device, often through a mobile wallet or mobile banking app.
• Mobile wallet services: A service that allows customers to store their financial information in a digital wallet on their mobile device and make payments by simply tapping their phone at a point-of-sale terminal.

Chatbots in Fintech Mobile Apps

Chatbots are computer programs designed to simulate human conversation. In fintech mobile apps, chatbots are often used to provide customer service and support, answer questions, and help customers complete financial transactions. Some of the main benefits they provide include:

• Improved customer service: Chatbots can provide 24/7 customer support, handle multiple conversations at once, and offer personalized interactions with customers, which can improve overall satisfaction.
• Enhanced user engagement: By offering tailored recommendations and insights, chatbots can keep users engaged and encourage them to use the app more frequently.
• Cost-effectiveness: Compared to hiring and training human customer service representatives, chatbots can be more cost-effective and scalable, especially for small and medium-sized businesses.

Several fintech mobile apps already incorporated chatbots into their technologies. They use them to offer a better user experience, including:

• Bank of America's Erica: An AI-powered chatbot that helps Bank of America customers manage their finances, check account balances, and pay bills.
• Ally Assist: Ally Bank's chatbot can answer customer questions and provide support related to banking and investing.
• Capital One's Eno: A chatbot that can help Capital One customers track their spending, manage their credit cards, and receive personalized insights.

Virtual Assistants in Fintech Mobile Apps

Virtual assistants are similar to chatbots in that they use artificial intelligence (AI) technology to provide tailored assistance to users but differ in several ways. While chatbots are primarily designed to answer simple questions and perform basic tasks, virtual assistants are more advanced and can provide more comprehensive financial advice and management access to financial services too. Here are some benefits of using virtual assistants in fintech mobile apps:

• Personalized financial advice: Virtual assistants can use AI algorithms to analyze users' financial data and provide customized insights and recommendations based on their unique financial situations and goals.
• Automated financial management: Virtual assistants can help users automate their finances, such as setting up savings goals, paying bills, and tracking expenses.
• Improved user engagement: Virtual assistants can provide a more engaging and interactive experience for users, which can increase usage and customer loyalty.

Fintech mobile apps that use virtual assistants include:

• Cleo: Helps users manage their finances, track spending, and save money. Cleo uses AI to provide personalized financial insights and advice to its users.
• Plum: A virtual assistant that can help users automate their savings and investments. Plum uses AI to analyze users' spending patterns and provide specially made recommendations for how much to save and where to invest.
• Digit: An assistant that helps users save money by analyzing their spending habits and automatically transferring small amounts of money into a savings account. Digit also offers tailor-made financial advice and insights based on users' financial goals.

Robo-Advisors in Fintech Mobile Apps

Another AI-powered technology used in investment apps, fintech Robo-advisors are a type of investment advisor that uses algorithms and artificial intelligence to provide automated investment advice. Distinct from chatbots, robo-advisors excel in delivering comprehensive financial advice and asset management services. Here are the advantages of integrating robo-advisors into fintech mobile apps:

• Personalized investment advice: Robo-advisors leverage AI algorithms to analyze users' financial information, crafting tailored investment insights and recommendations based on their unique goals and risk profiles.
• Automated portfolio management: Robo-advisors enable users to automate their investment strategies, including portfolio diversification, rebalancing, and asset allocation, ensuring efficient management without the need for constant user intervention.
• Lower fees: Compared to traditional financial advisors, robo-advisors typically offer more cost-effective solutions, making investment services more accessible to a broader range of investors.

Prominent fintech mobile apps that incorporate robo-advisors include:

• Betterment: A leading robo-advisor platform, Betterment employs sophisticated algorithms to create personalized portfolios aligned with individual investment objectives and risk preferences.
• Wealthfront:Renowned for its automated investment management services, Wealthfront considers various factors such as age, financial goals, and risk tolerance to construct and rebalance portfolios.
• Acorns: Acorn is an innovative mobile app that simplifies investing by rounding up users' everyday purchases and investing the spare change into diversified portfolios, offering a seamless and user-friendly investment experience.
• Robinhood: Widely recognized as a commission-free trading app, Robinhood also integrates Robinhood Invest, a robo-advisor feature providing automated investment advice based on user preferences.
• SoFi Invest: Combining robo-advisor functionality with a social element, SoFi Invest facilitates user interaction and learning while benefiting from automated portfolio management.

Challenges and Opportunities in Developing AI-Powered Fintech Mobile Apps

Each new technology that emerges brings innovations, new opportunities and benefits. However, it also creates new challenges. Artificial Intelligence is no different. Although the advantages of it are undeniable, it's essential to consider the significant challenges that Fintech companies may confront while integrating AI into their operations. Below are some of the most frequent challenges that financial firms might encounter:

• Data management:

Handling massive amounts of data and ensuring data quality can be a major challenge. Integrating data from different sources and addressing issues like data heterogeneity and data silos require robust data management strategies.

• Privacy concerns:

Protecting sensitive user data and adhering to data protection regulations are critical. Financial institutions and startups must work to ensure transparency in data usage and address potential biases in AI algorithms to maintain customer trust.

• Technical complexity:

Designing and implementing sophisticated AI models is a complex task. Developers must address computational and storage limitations while seamlessly integrating AI-powered features into the app.

Opportunities in Developing AI-Powered Fintech Mobile Apps

• Improved customer experience:

AI technology can lead to personalized financial products and digital financial services further. Enhanced user interfaces with natural language processing (NLP) and chatbots provide a more intuitive experience, while AI-driven insights and recommendations cater to individual customer needs.

• Increased efficiency:

Automating repetitive tasks reduces human error, while advanced fraud detection and prevention systems powered by AI algorithms reduce operational costs and increase security. Predictive analytics streamline decision-making, leading to operating costs and a more efficient operation overall.

Innovation and growth:

AI in fintech mobile apps presents opportunities for new business models and revenue streams. Businesses can gain a competitive advantage in a rapidly evolving market and expand into new markets and customer segments.

We understand that reading all the obstacles above, you meat feel overwhelmed and alarmed. however, only some things are lost. Some solutions may help to overcome the challenges and take advantage of opportunities that may come:

Implement robust data management strategies:

Utilizing data warehousing data analysis and integration tools, establishing data governance policies, using data points and investing in data quality assurance and validation can help overcome data management challenges.

Address privacy concerns proactively:

Complying with data protection regulations, designing transparent AI algorithms, and employing privacy-enhancing techniques like differential privacy and federated machine learning, can alleviate privacy concerns.

Leverage partnerships and collaborations:

Collaborating with AI and fintech experts, partnering with academic institutions and research organizations, and engaging in cross-industry collaborations can help businesses address technical challenges and drive innovation.

Future Prospects of AI-Powered Fintech Mobile Apps

As AI technology continues to advance, it has the potential to transform traditional financial processes, create new business models, and foster collaboration and competition among industry players. However, it is essential to navigate the regulatory landscape carefully to ensure that these advancements are sustainable and beneficial for all stakeholders. To stay ahead of the competition and implement new trends right when they emerge, we prepared for you a few themes that will keep on developing in the future.

1. Increased Personalization and Automation

• Hyper-personalized financial services:

AI-powered fintech financial apps that will be able to analyze vast amounts of customer data to offer increasingly personalized financial products and services. This will enable financial institutions to provide tailored investment portfolios, customized loan offerings, and individualized financial advice that cater to the unique needs of each user.

• Enhanced customer engagement:

AI-driven chatbots and virtual assistants will evolve to become more sophisticated and human-like, leading to seamless and intuitive automated customer support interactions. These AI-powered financial tools will provide instant support, guiding users through complex financial processes and offering personalized financial recommendations.

• Streamlined financial processes:

AI technology will continue to automate various financial processes, such as loan approvals, payment processing, credit scoring, and fraud detection. This less human intelligence will result in faster, more accurate, and cost-effective operations, benefitting both businesses and consumers.

2. Transforming the Fintech Industry

• Evolution of business models:

Integrating AI in fintech mobile apps will drive the development of innovative business models, enabling the financial services industry and institutions to have customer service teams explore new revenue streams. For example, AI-powered financial advisors or robo-advisors could disrupt the traditional wealth management industry, making professional financial advice accessible to a broader audience.

• Collaboration and competition:

As AI technology advances, we can expect increased collaboration between traditional financial institutions, fintech startups, and technology companies. These collaborations will foster innovation and create a competitive landscape in the finance industry, driving the development of cutting-edge AI-powered fintech solutions.

• Regulatory implications:

The widespread adoption of AI in Fintech mobile apps will necessitate the development of appropriate regulations to ensure consumer protection and privacy. Regulatory bodies must strike a balance between fostering innovation and safeguarding the interests of consumers and businesses.

How to build a fintech, AI-driven mobile app?

After reading all the above, you consider enhancing your business by incorporating AI technology into it. As it is a vast and complex topic, it's best to contact someone with experience, like our Consultants at SolveQ. However, if you want to see the process first and then consider your options, or you want to get a grip on the topic and be prepared for your next meeting with us, here are the basic steps in creating a mobile baking app:

Step 1: Determine Your Niche

Before building a fintech app, you should brainstorm and validate business ideas from a perspective. Determine the area you wish to operate in and spend time researching to gain an understanding of an appropriate niche, required technologies, target market, and its needs. Key factors in determining your target audience include gender, age, location, preferences, and habits. Use popular methods such as social media analytics tools, Google Analytics, or Google Search Console to research effectively.

Step 2: Define Key Features

Once you have clarified everything from your end, it's time to define future fintech app features based on your chosen industry and demographic. Some essential elements for fintech apps include user-friendliness, innovation, speed, and cost-effectiveness. You do not need to stuff your first digital payments and banking solution with many new ideas to create a successful fintech app. Do market research and present something innovative, faster, cheaper, and user-friendlier for only the Fintech and financial sector.

Step 3: Ensure Legal Compliance

Your future fintech solution must be legally sound. Remember that every country has unique legal requirements for financial companies. Therefore, your application must comply with many privacy laws determined by the countries your product is designed for. Users' financial data must be kept secure to prevent hackers from stealing clients' personal information. Before launching your fintech app, check the legal agreements for using customers' financial data. Then generate a data privacy and management policy for your fintech application. Lastely prepare an insurance policy for accidental breaches, and create a backup.

Step 4: Select Tech Stack

Selecting a technology stack is a crucial part of fintech app development. The first option is native app development, which means building separate solutions for Android and IOS. Native apps have smooth performance and excellent user experience, but their building is relatively expensive and time-consuming. But there is one more option – cross-platform development. Your team will have to write just one codebase for both iOS and Android. The cross-platform app is the most time- and cost-effective decision because you need only a small software development team who can build a fintech app quickly.

Step 5: UI/UX Design

Designers are as crucial as a development team because fintech app users appreciate application appearance no less than its functionality. You've already read about the user-friendly functions above and know that the user account should be practical and valuable. Avoid interface filling of unnecessary features, make all essential functions readily available on the dashboard, and remember that users know nothing about coding but appreciate a nice picture that goes with simplicity and transparency.

Step 6: Develop a Minimum Viable Product (MVP)

Now, when you go through the steps above, you're ready to build a minimum viable product (MVP) using all these components. MVP is the basic version of a future application that includes its fundamental features. Its primary goal is to test a mobile banking mobile payment app before launching. You can't create a fintech app and skip this critical step in the development process. MVP is focused on a group of customers who are more forgiving and likely to give constructive feedback. Users' reactions will highlight weaknesses and features you need to add later. You'll also need mobile analytics to collect and analyze data and learn user behaviour. All these actions reduce costs and risks, help to gain users' early traction, and attract new investors.

Step 7: Test Your App

Before the app launching, you need extensive testing. This will help you detect any shortcomings and remove most of the bugs. This process includes app testing on different devices. The Beta version can be available only for your colleagues or local customers. Your application should be tested with all the essential tools. If it is bug-free, your

Summary

All in all, Artificial intelligence is changing many industries and Fintech is one of them. Online banking is a new norm, and mobile apps are the everyday basics. Therefore, AI-driven technologies are great ways to enhance existing fintech businesses or a new idea for an innovative startup.

The leading AI solutions in Fintech are various types of online assistants and chats. Since its beginnings, they improved significantly and are now crucial parts of banking applications. Therefore it is strongly advised to consider them as a feature in your software. To stay ahead of the competition, remember to acknowledge all the challenges that come with using these new incorporations and look for opportunities to overcome them. Lastly, watch out for the latest trends as they help you stay ahead of your competitors.

Nonetheless, the best way to improve your fintech business is with a dash of AI or a whole lot of it its good to contact people with experience in artificial intelligence engineering and great resources. This way, you can achieve your dream goal and bring your business to the next level. Contact SolveQ to book a meeting with our Consultants and feel satisfied with the results.