How AI Has Transformed Embedded Finance: A Closer Look

The integration of financial services into non-financial products, known as embedded finance, has seen a remarkable transformation in recent years, largely due to advancements in Artificial Intelligence (AI). As part of focus on embedded finance this April, The Fintech Times delves into the impact AI has had on this rapidly evolving sector.

Mikhail Dunaev, Chief AI Officer at Comply Control, highlights AI’s role in enhancing safety and efficiency in embedded financial services. By analyzing big data and rapidly assessing risks, AI enables financial companies to make well-informed decisions. Dunaev also notes the upcoming trend of personalizing services based on individual user assessments, which will lead to more customer-centric financial products, enhancing user loyalty and satisfaction.

Natasa Kyprianidou, Senior Director at Alvarez & Marsal, emphasizes AI’s transformative impact on decision-making processes, particularly in credit assessments and risk management. AI-driven algorithms have dramatically shortened traditional credit decision timelines to seconds, making financial services more accessible and responsive to consumer needs. AI’s contribution extends to intelligent underwriting, creating sophisticated risk profiles and customizing financial products to meet individual requirements.

Matt Purnell, Research Analyst at Juniper Research, discusses how AI has streamlined various processes in embedded financial services, making payment and lending experiences more efficient. AI processes loan applications and payments more efficiently, reducing cart abandonment and increasing consumer satisfaction. AI also improves data transparency and security, using generative AI to simulate user activity patterns for highly efficient fraud detection capabilities.

Nelson Castellanos, Chief Partnerships Officer at HDI Embedded, discusses AI’s role in enhancing customer experience. Chatbots and virtual avatars provide 24/7 support, and AI-driven fraud detection systems minimize fraudulent activity, identity theft, and exaggerated/staged accidents, ensuring greater market resilience.

Kurt Azzopardi, CTO of Andaria, notes the shift towards customer-centricity and seamless financial services through the fusion of AI and embedded finance. AI algorithms analyze user data to deliver personalized financial products and experiences, boosting user engagement and fostering greater financial inclusion.

Yaacov Martin, Co-founder and CEO of The Jifiti Group, highlights how AI helps personalize the customer loan journey in embedded lending. AI analyzes a customer’s real-time financial data to present loan options that fit the customer’s current needs, such as offering an affordable repayment plan at checkout for a large purchase.

AI’s impact on embedded finance has been transformative, enhancing safety, efficiency, decision-making processes, and customer experiences. As AI continues to evolve, its role in embedded finance is expected to deepen further, unlocking new avenues for financial accessibility and empowerment within diverse digital ecosystems.