Is autonomous Finance what the world needs- a world without banks?
Consider a world where the finances won’t need manual spreadsheets and laborious calculations; your financial tasks are effortlessly handled or simply self-driving. The realm of Autonomous Finance is where cutting-edge technologies like Artificial Intelligence (AI) and Machine learning(ML) are revolutionizing, which automates and improves much of our financial decisions and outcomes.
Autonomous Finance relies on algorithms and other autonomous systems that make it a real possibility in the near term rather than a fictional scenario to make financial decisions and conduct transactions. Autonomous Finance aims to create a place where machines can do most things more efficiently and transparently, which will help with a financial system that is less prone to human error or bias.
Autonomous Finance has gained significant attention in recent years, mainly as advancements in AI and ML have made it convenient to create more sophisticated algorithms and autonomous systems. These will create intelligent Assistants that can work 24/7 to provide superior returns on our idle money while mitigating risk and also provide greater efficiency, accuracy, and transparency in financial transactions that can reduce the risk of human error or bias. Also, it will help to democratize access to financial services, as it can reduce the need for intermediaries and make financial services more accessible to a broader range of people.
Recurring tasks such as subscription renewals and insurance will be automated to free up consumers’ time and attention as algorithms decide on our behalf.
The future of new-age banking is a world with no need for banks! Sounds too radical?
Questions are still there about the viability and effectiveness of Autonomous Finance. Some critics argue that autonomous systems may need help to fully replicate the decision-making abilities of experienced financial professionals, particularly in complex or unpredictable market conditions. Others say that Autonomous Finance may exacerbate existing inequalities in financial markets, as humans design algorithms and autonomous systems and may reflect human biases or limitations.
Autonomous Finance remains largely a concept, with few operational examples of it in practice. However, with ongoing advances in artificial intelligence and machine learning, Autonomous Finance may become a more prevalent feature of financial systems. Ultimately, adopting Autonomous Finance will require careful consideration and oversight to ensure that the risks or unintended consequences do not overshadow the benefits of such systems.
But the future is already here.
In this era of “Digital Banking” and “Fintechverse”, the handling of finances is already outsourced to thousands of algorithms working seamlessly across a suite of services to provide an integrated and hassle-free experience.
The application is realigning to refinance our debts when it’s most advantageous regarding interest rates and arbitrage opportunities. The system will invest our cash into longer-term investments (and rebalance them) when it makes the most financial sense. Life insurance and other such payments will be on autopilot, bills will be automatically paid, and subscriptions will be managed seamlessly.
The line between deposits and lending is blurred, and automation will erode this distinction further as ‘cash flow will be delivered as a service.’ Non-traditional data is opening up new vistas in this domain, and cash flow-based lending models are now possible, which serve new customer categories and markets.
While there’s a lot to look forward to when automated Finance becomes everyone’s reality, how things shape up will also depend on how regulations
& policy evolve.
A clear vision of the future financial landscape is critical to good strategic and governance decisions as financial institutions worldwide face growing competitive pressure to make significant strategic investments in AI, and policymakers seek to navigate the challenging regulatory and social uncertainties emerging globally.
Modefin can help banks with autonomous Finance as part of digital banking:
One major challenge for banks is managing risk. Modefin's advanced analytics solution can help banks identify and manage risk more effectively by providing real-time insight into customer behavior and transaction patterns
Fraud detection is another critical challenge for banks. Modefin's machine learning and AI-powered solutions can help banks detect fraudulent transactions and prevent unauthorized access to customer accounts.
Banks can use Modefin's customer analytics solution to understand better customer behavior and preferences, which can help them provide more personalized services and offers.
Modefin's digital transaction platform can help banks streamline their transaction processing, reducing the time and cost involved.
Modefin's open banking solution can help banks integrate with third-party service providers, which will help the customers get a more comprehensive range of services.