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Here’s how AI will affect the future of FinTech in India

By Puja Sharma

May 11, 2022

  • AI
  • AML
  • Credit risk
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AI (Artificial Intelligence)

India’s financial services industry has been a leader in adopting newer technologies and has been transforming over the years. With the help of AI-powered solutions, Indian financial institutions are unlocking revenue growth opportunities, reducing operating expenses, and automating manual processes, as per the report by PwC.

Artificial intelligence (AI) is also being used by financial firms to enhance security and transparency in systems for payments fraud prevention and detection, as well as identifying customers to meet regulatory requirements associated with Anti-Money Laundering (AML) and Know Your Customer (KYC).

With data-driven insights, innovative lending products can predict and minimize credit risk, as well as use analytics-based collection models. This has profound implications for financial inclusion and access. A key driver of AI use in FinTech is the need to forecast user behavior and better serve clients. The use of artificial intelligence (AI) in FinTech includes lending decisions, customer service, fraud detection, credit risk assessment, insurance, wealth management, and more.

Modern FinTech firms are employing Artificial Intelligence (AI) to boost efficiency, precision, and query resolution speed. The FinTech market is predicted to increase as an outcome of this aspect. Because of the increased usage of AI interfaces and chatbots for efficient customer support, the AI category will give a lucrative potential for growth in the fintech market share.

Lending decision: Insurance executives and future banking agents will ask the proper questions to robots rather than human experts as a result of data-driven management decisions at a reduced cost. Machines will then analyze the data and provide recommendations, which will aid leaders and subordinates in making better decisions.

Customer Service: Text chats, audio systems, and Finance Chatbots are examples of customer-facing technologies that can provide human-like customer care or expert assistance at a cheaper cost. Automation and chatbots allow Fintech companies to save time and money: As your Finance Assistant, chatbots can help.

Fraud Detection: Analytics software collects and analyses evidence necessary for a conviction. Artificial Intelligence technology then analyses and tracks user behavior trends to detect fraud attempts and outliers. At many phases of the claim handling process, AI can be applied to improve claim management. It can even expedite certain claims, reducing overall processing time and handling costs while improving client satisfaction. To assist in the detection of fraudulent claims, these algorithms hunt for trends in data.

Credit Risk Assessment: The use of AI in credit risk management is still in its early stages, but the combination of an exponential increase in the amount of data accessible and improved machine learning algorithms to digest it has the potential to have a significant influence. Early warning signals are often utilized in credit risk management to identify organizations at higher risk of default before bankruptcy. Traditional early warning systems rely significantly on expert judgment and require a large number of experimentally defined indicators.

AI is particularly good at detecting patterns in big amounts of data with a high velocity that can be utilized to generate credit default alerts. With enough computing capacity, AI algorithms may provide early warning signals based on signs from a variety of sources, as well as improve the indicator’s accuracy.

Insurance: Insurance management using AI technologies will streamline the underwriting process and make better recommendations for consumers by utilizing more unrefined data. Users can calculate their insurance needs with the help of online, automated agents. Rather than paying for expensive insurance treatments, it is preferable to recognize hazards and diseases early enough to prevent them. As a result, one can use the data that was previously used to assess risks to reduce the likelihood of losses occurring to the insured.

Wealth Management:  Artificial intelligence-powered smart wallets track and learn from the users’ actions and behaviors. Artificial intelligence systems aid in the identification of a client’s financial preferences and provide customized and curated recommendations. It informs the wealth manager about the client’s risk tolerance and by analysing data and presenting it in the context of relationships between customers, markets, products, and client profiles, it saves time for wealth managers.

Today, however, it is reshaping our everyday lives. The financial services (FS) industry – often the bellwether industry across the globe – has embarked on an AI-led transformation journey using AI-based predictive modeling, automated manual tasks, robotic assistance/ chatbots, advanced technologies like collaborative filtering, support vector machines, and deep learning.

 Key highlights

  • Indian financial institutions are currently thinking through the many implications of AI and how to lead with AI in the future.
  • Insurance management using AI technologies will streamline the underwriting process and make better recommendations.
  • Artificial intelligence-powered smart wallets track and learn from the users’ actions and behaviors.
  • AI is particularly good at detecting patterns in big amounts of data with a high velocity that can be utilized to generate credit default alerts.

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