An Overview of the Artificial Intelligence Applications in Fintech and Regtech

Abstract

The rapid development of artificial intelligence in recent years has led to an increase in artificial intelligence-based applications in many areas. One of the important application areas of artificial intelligence has been the field of Financial Technology (Fintech) and artificial intelligence has been widely integrated into financial services. Artificial intelligence-based Fintech applications such as workflow automation, fake and fraud detection, algorithm-based asset management (robo advisors), and intelligent consultant provide significant benefits to the finance industry. Fintech applications, which means using technology to improve financial services, may cause financial risks, despite its many benefits. Especially after the 2008 Global Crisis, it is observed that there are significant deficiencies in the regulation and supervision of financial markets. In this context, regulatory technologies (Regtech) are needed in order to eliminate deficiencies and minimize financial risks. In other words, developments in Regtech make secure the improvement of Fintech. The main purpose of Regtech is to find technological solutions that help regulate Fintech without harming their positive potential. Therefore, Regtech allows both an effective financial risk management and provides significant cost saving. In order to fintech and supervision authorities to get maximum efficiency, it is very important that the application processes of Regtech are standardized and technology-oriented. The purpose of this study is to provide an overview of how artificial intelligence will transform the financial system. It is also to discuss how financial technologies (Fintech) and regulatory technologies (Regtech) will be affected by this transformation.