- October 17, 2023
- Posted by: Abishek Balakumar
- Category: BFSI
Have you crossed paths with Erica from Bank of America, EVA from HDFC, Amy from HSBC, or Aida from SEB in Sweden?
If you’ve been dealing with banks and financial organizations, chances are you’ve chatted with these super-smart virtual assistants and chatbots. The use of Natural Language Processing (NLP) in the financial sector has been on the rise worldwide. More and more financial institutions are embracing advanced tech innovations, taking NLP beyond banking, insurance, and hedge funds (especially for sentiment analysis).
Artificial Intelligence and Machine Learning, alongside NLP, are making their mark in various areas of the financial sector like, operations, risk assessment, sales, research and development, customer support, and many other fields. This expansion boosts efficiency, productivity, cost-effectiveness, and time and resource management.
Take, for instance, the convenience it brings: Instead of the hassle of logging into individual accounts to check your balance, users can now effortlessly access their account information through chatbots and voice assistants. These digital companions are everywhere, from chatbots to voice assistants like Amazon Alexa, Google Assistant, and Siri.
Sentiment Analysis, often hailed as the next game-changer in the finance sector, plays a central role in chatbots, voice assistants, text analysis, and NLP technology. It’s a key component of natural language processing used to decipher the sentiments behind data. Companies frequently employ sentiment analysis on various text sources such as customer reviews, social media conversations, support tickets, and more to uncover genuine customer sentiments and evaluate brand perception.
Sentiment analysis aids in recognizing the polarity of information (positive or negative), emotional cues (like anger, happiness, or sadness), and intent (e.g., interest or disinterest). It is crucial in brand reputation management by providing insights into overall customer attitudes, challenges, and needs. This allows for data categorization by different sentiments, resulting in more accurate predictions and informed strategic decisions.
So, how can BFSI make the most of sentiment analysis? This emerging field has firmly rooted itself in the financial industry. Banks and financial institutions can employ AI-driven sentiment analysis systems to understand customer opinions regarding their financial products and the overall brand perception.
Of course, this approach may necessitate a certain level of data proficiency that financial companies must acquire before launching full-fledged sentiment analysis projects. Sentiment analysis stands as a highly promising domain within NLP and is undoubtedly poised to play a substantial role in the future of financial services.
Here, we’ll delve into the seven most prominent applications of sentiment analysis in financial services.
- 1. Portfolio Management and Optimization: NLP can help financial professionals analyze vast amounts of textual data from financial news and market trends to assess the sentiment surrounding specific investments. This sentiment analysis can aid in making informed decisions about portfolio management, identifying potential risks, and optimizing investment strategies.
- 2. Financial Data Analytics: Sentiment analysis enables financial firms to gauge the market’s sentiment toward specific assets or companies by analyzing news articles, social media, and reports. This information can be used to assess the volatility of investments and make data-driven decisions.
- 3. Predictive Analysis: NLP can be used to analyze historical data and predict the future performance of investment funds. This involves assessing sentiment and other textual data to identify high-risk investments and optimize growth potential, even in uncertain market conditions.
- 4. Customer Services and Analysis: Financial institutions employ NLP-driven chatbots and virtual assistants to enhance customer service. These AI-driven tools use NLP to process and understand customer queries, improving customer experience and satisfaction.
- 5. Gathering Customer Insights: By applying sentiment analysis and intelligent document search, financial firms can gain insights into customer preferences, challenges, and overall sentiments. This information is valuable for personalizing offers, measuring customer response, and refining products and services.
- 6. Researching Customer Emotional Responses: AI-powered tools process vast amounts of customer data, such as social media posts, chatbot interactions, reviews, and survey responses, to determine customer sentiments. This allows companies to better understand customer attitudes toward their products, services, and brands and analyze responses to competitors’ campaigns.
- 7. Credit Market Monitoring: Sentiment analysis tracks credit sentiments in the media. Financial institutions can use NLP to process information from news articles and press releases to monitor the sentiment related to specific bonds or organizations. This data can reveal correlations between media updates and credit securities’ market performance, streamlining financial research efforts.
Future of NLP – Sentimental Analysis: Where does it stand today and tomorrow?
NLP has made significant strides in the banking and financial sector, supporting various services. It enables real-time insights from call transcripts, data analysis with grammatical parsing, and contextual analysis at the paragraph level. NLP solutions extract and interpret data to provide in-depth insights into profitability, trends, and future business performance in the market.
Soon, we can anticipate NLP, alongside NLU and NLG, being extensively applied to sentiment analysis and coherence resolution, further enhancing its role in this domain.
Training computers to comprehend and process text and speech inputs is pivotal in elevating business intelligence. Driven by escalating demand, Natural Language Processing (NLP) has emerged as one of AI’s most rapidly advancing subsectors. Experts anticipate reaching a global market value of $239.9 billion by 2032, boasting a robust Compound Annual Growth Rate (CAGR) of 31.3%, per Allied Market Research.
NLP-based sentiment analysis is an innovative technique that enables financial companies to effectively process and structure extensive volumes of customer data, yielding maximum benefits for both banks and customers. This technology is positioned to empower traditional financial institutions and neo-banks alike, as it enhances current customer experiences, diminishes friction in financial services, and facilitates the creation of superior financial products.
In the finance and banking sectors, NLP is harnessed to streamline repetitive tasks, reduce errors, analyze sentiments, and forecast future performance by drawing insights from historical data. Such applications enable firms to realize time and cost savings, enhance productivity and efficiency, and uphold the delivery of quality services.