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We learn what events and decisions accelerated the development of financial technologies in Ukraine and what is the purpose of artificial intelligence. The epidemic, quarantine and other disasters
The epidemic, quarantine and other disasters that humanity has experienced in recent years have, among other things, fundamentally changed the needs and behavior of consumers, encouraging the search for alternative ways to solve common tasks. As a result, the range of services that can be ordered and paid for online has expanded significantly. New realities have contributed to the increase in the number of non-cash payments successfully used by fintech companies, organizations that use modern technologies to provide a variety of financial services. According to the Ukrainian Association of Fintech and Innovation Companies (UAFIK), 23% of representatives of this business niche increased their customer segments during the pandemic, and 17% even saw an increase in profits.
Moreover, the adoption of the Law “On Payment Services” in 2021 formed the basis for the introduction of the concept of open banking in Ukraine, and also laid the foundation for the integration of our payment market with the European market.
open banking
Relatively behind in 2015, the PSD2 payment directive appeared in Europe. The law, which went into full effect in September 2019, required banks to provide their customers’ financial data to third-party service providers with their consent. Finally, we’re talking about fintech companies that need to operate with enough information to serve consumers as effectively as possible. This is how the concept of open banking was born and quickly gained popularity in Europe and the USA. According to the estimates of Statista, a German company specializing in working with data, the number of open banking users in the EU could reach 63.8 million by 2024. For comparison, there were less than 12.2 million in 2020.
For the convenient exchange of financial data, banks open their own API interfaces – specific sets of methods and tools for software development. With their help, fintech companies can interact with banking systems, obtain financial information and offer account holders an expanded range of opportunities. This process is called Banking as a Service (BaaS).
According to Platformable’s open banking trends report, by the end of the first half of 2022, there were more than 1,500 API-enabled banking platforms worldwide. And that’s 8% more than a year ago. It is not surprising that recently open banking has been regularly included in the list of fintech trends, and API technologies are most widely used in this field among foreign and Ukrainian companies.
In the fall of 2021, UAFIK, together with the Association of Independent Banks of Ukraine (NABU) and a number of other organizations, signed a memorandum on Open Banking of Ukraine “On interaction, cooperation and public dialogue in the working platform in the field of open banking”. API Center”.
Why is this concept attracting more and more countries, companies, institutions, users and attracting so much attention? The truth is, open banking is a big step towards maximum technological and customer-oriented financial services. This form of cooperation encourages banks to continuously improve to remain competitive. As for fintech companies, they are getting enhanced opportunities to further meet their customers’ needs. We will talk about these needs later.
Solved by personal finance and artificial intelligence
The world is still recovering from a protracted pandemic and struggling to cope with its economic consequences. Meanwhile, the Ukrainians faced new financial problems as a result of the all-out Russian occupation. Adverse circumstances encourage people to carefully review their spending systems, take a more responsible approach to budget planning, and seek savings opportunities. All this contributes to the widespread exacerbation of problems with personal finance management. As a result, there is a huge demand for tools designed to simplify stressful mathematical calculations and help users make the right decisions. According to a study conducted by Verified Market Research, the global market for personal finance software could exceed $1.42 billion by 2026.
Therefore, it is now easy to see the bright prospects of fintech companies in the development of mobile applications to manage personal finances. Using APIs that technologists have discovered and manipulating consumer financial data, they can develop a range of useful products that allow bank account holders to track various cash flows, build capital, plan spending and save. As the leader of MobiDev’s JavaScript group pointed out Yuri Luchaninov“The best way to make a money management application as efficient as possible for users and therefore more successful in the market is to provide it with artificial intelligence capabilities.”
The inclusion of artificial intelligence in the provision of various financial services is no longer a new trend in the world, and especially in Ukraine. According to the 2021 UAFIK study, our fintech companies are using artificial intelligence to create online lending, insurance and financial instrument comparison products. It is also stated that chatbots have become the core technology of payment services and personal finance products.
Artificial intelligence can be used to collect large amounts of data, assess risks, optimize processes, etc. It usually works when it comes to In the case of financial companies, it significantly simplifies the monitoring of the economic situation of customers, the collection and processing of information. about their accounts, loans and investments. Overall, the Ukrainian Association of Fintech and Innovative Companies predicts that the number of tools with artificial intelligence capabilities will continue to increase.
This is confirmed by the Mordor Intelligence report, which states that the value of global artificial intelligence in the financial technology market could grow from $7.91 billion in 2020 to $26.67 billion in 2026. Therefore, the use of artificial intelligence is another bright trend in the field of fintech, which is also gaining popularity among personal finance software developers.
AI can see patterns in data. And software solutions based on self-learning algorithms enable users to offer recommendations based on their financial behavior. Thus, a person can get a detailed analysis of their expenses, an individual budgeting plan, and most importantly, a personalized user experience that significantly increases the loyalty and trust of product consumers. Here’s the key difference between an ordinary money management app and a powerful personal finance assistant. Skillfully developed applications involving artificial intelligence can be safely called a worthy alternative to financial advisors. They can help establish economic goals, present effective scenarios for achieving them, show ways to reduce costs, and advise on investments.
However, when developing “smart” applications equipped with artificial intelligence, it should not be forgotten that what makes them so effective and useful is the connection with the bank accounts of the users. In the worst-case scenario, a person will be forced to manually enter the lion’s share of financial data, and this is unlikely to have a positive impact on their interaction experience with the product.
Thus, we found out what is the exceptional significance of the concept of open banking. Popular APIs allow users of fintech applications to automatically receive information about their expenses and income, thus providing a continuous flow of data necessary for effective financial planning.
Fintech application examples
To avoid being exhaustive, you can find a short list of AI-based personal finance programs here. And let’s start with a few foreign examples:
This financial app was developed in the UK and later brought to the United States and Canadian markets. It helps users track, invest, send and save money. Features include linking all accounts, setting up weekly and monthly paychecks, budgeting, tracking subscriptions, categorizing transactions, spending analytics, and more. In addition, the application reliably protects user data thanks to bank-grade encryption.
Developed by Silicon Valley entrepreneurs, it’s available on iOS in the US and Brazil. This is a free financial assistant based on artificial intelligence and behavioral economics. The app identifies patterns of how a user typically spends and then uses these patterns to create personalized financial strategies. The main purpose of this program is to help a person spend less money on the same things and change habits that negatively affect the budget.
A product of a British fintech company available to users in the UK and Europe. Over the past few years, Plum has evolved from a chatbot to a full-fledged, AI-powered budgeting app that helps people save and invest. The program is available for free for basic savings and budgeting. If we talk about the services in the field of investment, the application receives a commission according to the investment fund chosen by the person.
This American financial assistant with artificial intelligence has won the trust of users in many countries of the world. It allows you to get a personalized plan based on your actual habits, track monthly bill payments and expenses by category, and of course achieve your financial goals. Based on the understanding of monthly expenses, AI helps users create an effective, flexible budget and adapt it to changes at any time. Cleo never stores the login details of its users’ bank accounts, it has a fairly large set of free functions and a few paid services.
What about us?
Unfortunately, Ukraine cannot yet have a variety of financial management practices. But if we take into account the rather active development of domestic fintech, we are hopeful for positive changes in the near future. Currently, a large part of the personal finance market is occupied by chatbots that act as advisors and provide automated financial planning solutions to users. In the Ukraine 2021 fintech companies catalog created by UAFIK, a domestic product of this direction is mentioned, which undoubtedly deserves our attention:
This automated bot advisor is available 24/7 for Ukrainians. As a virtual financial advisor, he can answer questions about personal finance and investments, create a monthly payment schedule, regularly remind you of necessary actions, and set financial goals.
Overall, the world has maintained positive trends in the development of financial technologies over the past few years. Civilized society has become so accustomed to the ability to perform most of the necessary operations with just a smartphone or laptop that further transition of various services to the online plane is inevitable. And hardly anyone wants to complain about it, because let’s face it, modern business models tend to provide our maximum comfort.
Anastasia Kirylenko, Kyiv
First photo: Unsplash
Source: Ukrinform
As an experienced journalist and author, Mary has been reporting on the latest news and trends for over 5 years. With a passion for uncovering the stories behind the headlines, Mary has earned a reputation as a trusted voice in the world of journalism. Her writing style is insightful, engaging and thought-provoking, as she takes a deep dive into the most pressing issues of our time.
