We have already established the fact that AI will certainly play a key role in transforming the future of Indian financial services. With various fintech business models in place, BFSI industry is now adopting the AI-based fintech solutions at a much larger scale than ever.
“Most corporates, and increasingly governments as well, are experimenting with how to use AI to improve their processes and outcomes. The fintech industry is no exception and is, in fact, one of the leaders in its adoption,” said Gaurav Jalan, Founder and CEO, mPokket.
And this is not just one opinion. About 32% of financial service providers are already using AI technologies like predictive analytics, voice recognition among others, according to joint research conducted by the National Business Research Institute and Narrative Science. For instance, banks like SBI, Bank of Baroda, HDFC, ICICI, YES Bank and others are already deploying artificial intelligence to streamline the regular processes.
However, artificial intelligence, in a standalone manner, has not been able to showcase any groundbreaking progress so far.
As Balachander Sekhar, CEO, RenewBuy.com says, “AI acts as the binding glue for amalgamating all big data, machine learning and blockchain applications together.”
Thus, niche AI applications in amalgamation with other technologies are becoming quite popular among Indian fintech startups, banks and financial organisations. For instance, Acko has been experimenting with AI for a use case of damage detection. Here instead of a physical inspection of the vehicle by the insurer which might take 3-4 days to conduct and approve, AI, on the other hand, will allow the customer to take a video and upload which can then get instantly verified and approved.
“Globally, a lot of players have leveraged AI-based image processing technology to instantly settle claims leading to substantial cost savings in the assessment process as well as improved customer experience. Also, the usage of app-based telematics has helped deliver personalised pricing for the customer and fast claim processing in insurance sector,” said Acko CEO, Varun Dua.
Will Artificial Intelligence Become The Key For Fintech In The Future?
According to Rahul Sekar, cofounder and CTO at Shubh Loans, investment in AI is a necessity in any industry, but especially so for fintech. “In a fast-changing environment, policies and processes need to be nimble and tailored to customer characteristics. It is not possible to provide the next-gen customer experience without AI,” he added.
Gaurav Chopra, Founder & CEO, IndiaLends and Manish Patel, cofounder of Mswipe further agrees to the fact that Artificial Intelligence has the potential of becoming a significant facet in the future growth of the Fintech sector and AI can be a real game-changer in boosting the efficiency and accuracy of the financial services sector.
Here are a few reasons why banks and other financial institutions are adopting AI algorithms and models in their fintech applications:
- To meet rising dependence on financial apps for transacting, and timely and relevant financial product discovery
- To meet customer and market expectations around tech capabilities and data-driven operations
- For cost-effective and personalised solutions for consumers
- To prevent cyber fraud, regularise compliance and run smarter, error-free operations
- For real-time processing of data from multiple sources
- To offer enhanced customer experience through sentiment and cognitive analytics
- To broaden products, solutions, and services beyond the core offerings
- To improve pre and after-sales services to enhance customer experience
- To address more complex fintech problems with solutions that are simple and easy to access for masses
How AI Will Create A Difference In Future Banking And Financial Services?
Convenience being a fundamental value proposition to users, and AI acting as a medium to deliver the same is ensuring better user experiences for a number of financial tasks such as payments, budgeting, banking, and loan applications. “Applicability of AI in fintech companies is focussed around the benefits for a large population which is well recognised by both customers and investors,” said Neeta R Ranjan, Founder and CEO of PaisaDukan.
According to several other industry leaders that Inc42 spoke to some areas where AI will create a significant transformation in the delivery of financial services include customer service and operational efficiencies:
These are some of the operational touchpoints for AI tools and algorithms:
- Chatbots and robo advisors to orchestrate personalised and contextual conversations
- Customer onboarding to reduce turnaround time for decision making based on credit and social profiles
- In facilitating automation of workflows for internal operations such as document processing and duplication of effort across departments
- In optimising the supply chain
- In preventing asset pilferage
- To control costs for critical features at every stage
- For faster innovations and quality solutions to improve productivity
- To save man-hours wasted on repeatable mundane tasks
Will AI Help Fintech Players Gain An Edge Among Competitors?
Flexiloans cofounder Abhishek Kothari shared an interesting definition of fintech. According to him, fintech, as a concept, revolves around the alchemy of experience, automation, and intelligence.
“While technology can help deliver solutions and experiences seamlessly, it misses the aspect of inherent intelligence that can only be solved through effective use of AI that is now possible to build and deliver through advancements in data, algorithms and computing power,” Kothari said.
Like Kothari, Alok Mittal, CEO & MD of SME lender Indifi Technologies emphasised that AI is going to be the core differentiator for fintech companies that use it to build credit risk predictions, behaviour and pattern recognition and fraud applications.
“Considerably, the sophistication of the algorithms used to optimise critical functions and turn data into actionable insights will differentiate the winners from the ‘also-rans’ in the market,” added Mittal.
What Gaps Can AI Fill In Fintech?
Going ahead, concepts like open banking, neobanking, and API-based banking are getting ready to take the Indian banking industry to the next level of innovation. And like many experts and founders said earlier, AI will certainly be going to play a critical role in this transformation.
AI has already changed the way we bank and carry out financial transactions. Given the nationwide impact, the adoption AI has had in payments, transfers, withdrawals, savings, insurances, lending and risk management, it has gone past the stage of just being a buzzword. “In less than five years, AI as a tool is being used to not only increase efficiency but also optimise profits and larger business goals,” said Lendingkart founder Harshvardhan Lunia.
However, Rajeev Agrawal, CEO of payments platform Innoviti accepts that AI is still in its nascent stages of development and will require a strong digital backbone supported by high-quality data and skilled workforce to fully draw the essence of the technology.
The process might take some time but, given the impressive results, more and more companies will align themselves with this evolving paradigm. But the industry leaders do believe that this shift is already well underway.
In line with this thought, Rajesh Mirjankar, MD & CEO, InfrasoftTech was clear on why fintech companies need to implement automation through AI and ML algorithms, “In the current scenario, it’s more apt to say that fintech will have a future only with proper utilisation of AI, given the increasing volumes of transactions and channels in a digital banking era.”