Blockchain Development – Convergence with AI for Improved Banking Services
We all know the significance of AI and blockchain across industries. Both are widely used on the IoT (Internet of Things) – blockchain brings the immutability of massive streams of data produced by IoT devices and stored in a fully secured, decentralized environment. The predictive power of Artificial Intelligence helps to process, analyze, optimize, filter, and structure these huge datasets and make predictions upon request and then conclusions based on the estimates received.
Both blockchain and AI applications are widely used across industries. Several AI-empowered marketplaces are tokenized on blockchain technology. Also, IoT data saved on-chain can be processed through AI technology. Moreover, there exists some AI-enabled blockchain solutions in which decentralized neural networks are combined with blockchain consensus protocol to empower businesses with the collective intelligence in a decentralized, secure environment.
AI and Blockchain Collaboration for Applications in Finance
Here, AI as a Service is used by combining its predictive power with blockchain’s decentralized security – found the rightful use in the financial sphere
In this article, we will show you how these technologies will be useful for developers, all while complementing each other for banking and lending services as a use case.
Financial institutions are already using blockchain to conduct their business operations with safety, consistency and authentication.
Loan Services as a Use Case:
When it comes to banking and financial operations, the best possible use case for blockchain and AI convergence into one application is lending services. Banks need to keep, track and protect the record of thousands of loan applications accepted or rejected daily.
Here’s what lending service requires to automate everything related to debtor’s banking history;
- Reliable data storage
- Personal data protection
- Data-client connectivity
- Processing loan requests quickly
Let’s take a look of this tech-fusion in actual practice.
Clients can check their eligibility for the loan and the amount they can easily borrow. They can also get all essential information about financial services they can avail, and loan repayments, and request tracking, etc.
Since, these requests are stored on-chain it serves as legitimate proof for financial institutions like banks about their authenticity and prompt processing of the saved loan applications in the decentralized system.
Cryptography and hashing techniques ensure the mandatory level of data security and client privacy.
Banks officially deal with all the debt requests received through the blockchain system and can regulate their lending services parameters beyond doubt or dispute and establish loan’s validity and repayment periods.
Al helps banks make their debt approval system more scalable and flexible. It also allows them to deal with massive amounts of data hassle-free through simplified loan acceptance algorithms.
Here’s how this blockchain application supported by AI (a web form or mobile app) will look like.
- A user will access the mobile app (or maybe its web version) to get an ID and proceed further to input the required information.
- The app will send this loan request to the blockchain that could be a smart contract or its analog. The hash of the information (not the info itself) will be stored on-chains to ensure absolute privacy and security. It allows the user to easily track the request.
- The app will send this data to the backend at the same time for the confirmation from the AI module – to be processed and analyzed to get the predicted results.
- The request information will be backed up in the blockchain-based database that provides banks with supplementary support for request processing.
- The AI module deals in making the final loan decision by returning the predicted results of the submitted request to the blockchain. Only the concerned applicant and the bank can view this decision.
- The client application stores necessary information like request ID, loan amount, and official response, etc., so that I can be easily forwarded to the banking application for the required confirmation.
- Only the client ID and the official response will be saved on-chain and can be used by the bank employee to process the requested service – in this use case, it’s approving the client’s debt request.
This is how the loan acceptance process can become flawless, faster, secure and extremely convenient for clients as well as the financial service provider – ensuring privacy for the clients and easily manageable by the banks.
Advantages of Blockchain Unified with Artificial Intelligence
AI and blockchain are entirely different technologies because they are applied in completely different areas. AI is a centralized service that deals with user’s private data that cannot be accessed or reproduced by any entity except the authorized individuals. On the contrary, blockchain as a decentralized technology works with the open, but transparent, immutable, and cyber secure.
Let’s see the benefits of these future-forward technologies in finance
- Unified data
- Quick Verification
- Firm Control
- Security and privacy
- Unbreakable evidence
In a nutshell, the best of all blockchain and AI features can be fused together for custom software development that offers the benefits of both technologies. In the discussed use case, blockchain is used for secure data storage and conforming loan requests and AI module is integrated to make lending predictions.
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