How AI and Climate Change Affect Fintech?

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Climate change and new developments in artificial intelligence could potentially change the face of fintech, venture capital firm Team8 discovered in a report on the future of the industry published earlier this year.

VC set out to answer the question, “What will fintech look like in 2030?” And it turns out that while many changes are possible and likely, a few potential, if less likely, changes could completely change the face of fintech.

Fintech, or financial technology, is a term used to encompass technological changes and developments in financial services and products.

AI is one of those global processes that has the potential to revolutionize industry. There is good news and bad news about the use of AI in fintech, said Ronin Asia, managing partner of Team8's Venture Creation fintech fund.

A more efficient financial industry?

“The good news is that it will make the financial industry a lot more efficient,” Asia said, citing the mortgage process as an example. Currently, wait times for meetings and approvals with brokers can take weeks, but AI can shorten that to days by offering more personalized solutions as it targets individual clients rather than sorting people into broad categories. , as is now done.

Ronin Asia. (Credit: RON KEDMI)

The bad news is that “fraud will be a huge risk,” he added. AI has made impersonating others much easier and more affordable, enabling fraudsters to impersonate people more easily.

Fund partner Galia Beer-Gable said that traditionally, banks have been slow to innovate because of the large amount of data they have about their customers, but they nevertheless have an advantage when it comes to AI. He explained that while fintech companies are well-positioned to be a part of incorporating AI into banking because of their technological know-how, banks' large data sets can enable them to train AI effectively.

“Large language models and applications built on top of them [will] Generate extraordinary productivity gains and cost savings for banks,” the report said.

Overall, AI “has the potential to completely change the way we access financial services,” concluded Asia.

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Climate change also has the potential to create far-reaching changes in fintech, the report noted. Consumer concerns regarding climate change and the environment [will] This leads to a significant shift in incentives for businesses and financial services providers,” the report said.

Beer-Gable said wars and current global tensions are creating an environment that is hostile to business, but there are still reasons for optimism.

“Times of instability and crisis, financial and non-financial, are times that bring many needs to the surface, and often after these crises, very important companies are born,” he explained.

Team8 is a VC focused not only on providing capital for the entrepreneurs they partner with, but also on helping them build businesses. They achieve this by conducting in-house research and making forecasts for the industries they are involved in and investing in.



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