Experts claim that combining blockchain technology and artificial intelligence could revolutionize the financial services industry. The combination will provide improved insight, increase productivity, and reduce costs.

 

According to the published report, artificial intelligence and blockchain technology can change financial services—their application potential in the financial field.

 

Blockchain technology and artificial intelligence is a revolutionary technology of our time. Artificial intelligence can create computer systems. These systems can recognize patterns, gain knowledge from experience, and make decisions. Often, such tasks require human intelligence to accomplish.

 

At the same time, blockchain technology represents a decentralized, secure, and transparent technology. It enables secure and public transactions without the use of intermediaries.

 

This combination could revolutionize various industries and change the way we live and work.

 

For example, artificial intelligence and blockchain technology can improve efficiency. It can reduce costs, improve security and provide real-time insights. Additionally, it can provide personalized advice to customers in the financial services industry.

 

What is blockchain?

Blockchain technology is still not popular. There are no actual cases of financial institutions for reference. Still, those who want to implement this technology lack specific imagination and always think that blockchain sounds confusing. The architecture of the blockchain actually resembles the Internet when it is implemented. But it is only the "Internet of Value" which is a network dedicated to the exchange of valuables, and it is a network shared ledger. The perimeter of the chain can be divided into "private" and "public" just like a network, and it can determine which units to share the network with.

 

The biggest feature of blockchain technology is that it cannot be changed. Any record will be kept forever and consists of four main elements:

 

1.     Shared Account Book: Established records cannot be changed. Each change is added to the old record, and blockchain members can synchronize all records.

2.     Security and Privacy: Each record can be verified and checked by members, and documents are difficult to tamper with.

3.     Consensus: Records must be agreed upon and authenticated by all participants.

4.     Smart Contract: With technology like the Internet of Things, it can automatically perform basic business logic without manual writing and repeated review.

 

Save time, money, and safety

Blockchain saves time and money. In the traditional financial process, each unit must update a copy, which is time-consuming. Sometimes the process gets stuck, and the funds themselves cannot be disbursed. But, blockchain allows each unit to share information, directly saving time and money. A handling fee is charged for each intermediate unit.

 

Information exchange is needed, and security is also very important. The immutable nature of the blockchain, combined with the fact that all members can see the records, makes managing the records extremely difficult. As part of privacy, some information can be encrypted separately, so you don't have to worry about revealing all the information.

 

Blockchain application

Blockchain is just like the internet. The smaller the connections between different departments within the enterprise, the greater the exchange of resources between other companies and the trading of local or even global stock and bond markets. They can perform faster than now. In terms of finance, be it securities, trade, syndicated loans, retail banking, or public records, better cost-effectiveness can be achieved through blockchain.

 

For example, letters of credit are commonly used to prove credibility. But a company usually has to apply for multiple letters of credit for different objects. Also, blockchain members only need to apply for letters of credit to stay in the same block. Permission to use credit ranges within the chain.

 

There are also corporate bonds, which often take three to four days to apply for short-term loans of less than a month. Blockchain can get cash to customers faster.

 

Also, paper-based commercial contracts are no longer easy to manage and blockchain can be used to speed up cash flow and manage the sales process. In the future, intelligent refrigerators can be ordered automatically through blockchain and smart contracts. Groceries and payments no longer have to go through layers of accounting systems.

 

Since all manufacturers will leave records of the manufacturing process, blockchain can also be used to track manufacturers. For example, every part of an airplane must be recorded and numbered to know who built it. With transactions made through blockchain records, every screw manufacturer can be seen at a glance.

 

Benefits of Artificial Intelligence and Blockchain Technology in Financial Services

 

The combination of artificial intelligence and blockchain technology can bring many benefits to financial services, including:

 

●      Improve security

Security is one of the toughest challenges in the financial services industry. But thanks to decentralized and immutable ledgers. Blockchain technology can provide a secure and transparent platform for financial transactions.

 

Artificial intelligence can help improve security by detecting fraud and alerting users to suspicious activity in real time.

 

●      Improve efficiency

AI and blockchain technology has the potential to dramatically improve the efficiency of financial services. The former can transform manual operations and make critical decisions on the fly. The latter can reduce the time and cost of clearing and settling transactions.

 

This combination has the potential to significantly improve the speed and efficiency of financial services.

 

●      Improve customer experience

AI and blockchain technology can also improve the customer experience. It can help users by providing real-time insights and personalized recommendations.

 

For example, artificial intelligence can analyze customer data to provide customized investment advice. Blockchain technology can provide faster access to account information and reduce transaction processing time.

 

There is great optimism about the combination of artificial intelligence and blockchain and its positive impact on finance and entrepreneurship. However, there are still many challenges and problems that limit the application of this combination.

 

Many challenges

The most important challenges of integrating AI and blockchain technology into financial services, including:

 

●      Regulations

As the financial services industry is highly regulated, regulatory compliance is one of the most difficult challenges in integrating AI and blockchain into financial services, requiring changes to existing regulations.

 

●      Adopt this technology

Another challenge is getting financial institutions and consumers to use artificial intelligence and blockchain technology. Despite the obvious advantages of such technology, there are many issues with security, privacy, and implementation costs.

 

●      Operability

Interoperability between systems and platforms is crucial for the integration of AI and blockchain technology. This requires significant investments in technology and infrastructure, which can lead to higher costs for financial institutions.

 

The Future of AI and Blockchain Technology in Financial Services 

While the integration of artificial intelligence, blockchain technology, and financial services is still in its infancy, the promise is bright.

 

Technology is advancing and relevant regulations are changing. We can expect more and more financial institutions to improve the efficiency and security of their services. And it will apply artificial intelligence and blockchain technology. In the future, we can also expect to see the development of new and innovative financial services that harness the power of artificial intelligence and blockchain technology.

 

The combination of artificial intelligence and blockchain technology has had a significant impact on financial services. We can expect continued growth and innovation in this area. Despite the challenges, the potential benefits of these technologies make them compelling benefits for financial institutions and clients. Due to the combination of artificial intelligence and blockchain technology, financial services of the future will be safer, more efficient, and more customer-centric.