New FDI Guidelines for E-Commerce S...
Finally, the Department of Industrial Policy and Promotion (DIPP) released Press Note No. 2 of...
Artificial intelligence and machine learning is a new driven innovation that is being adopted by the fintech industries across the globe. In the present scenario, the impact of artificial intelligence (AI) is clearly observed in humans life. Financial institutions are adopting and evaluating AI for protection against threats, investigation intelligence and fraud analysis. Today, AI is also capable of rectifying human errors which makes it the perfect component in any application in the financial industry.
Artificial Intelligence (AI) improves results by applying methods derived from aspects of Human Intelligence at a beyond human scale. Over the past years, the evolution of AI has also made an impact on the applications or services provided by Fintech. With the rise of artificial intelligence and further enhancements in technologies, Fintech will witness the changes across all processes, mainly in stock market trading. Below are some application areas where artificial intelligence is making a significant impact with respect to Fintech in India.
Improved Speed and Reliability of credit scores- The Artificial intelligence is helpful in gathering data from the sources such as social media, geolocations, web browser history of a person to determine and analyse the creditability of the person in respect to his/her financial position. This is helpful for the banks to a great way to assess the credit score of the customers. This is most useful for developing nations like India.
Automated Virtual Financial Assistants- The virtual assistants provide recommendations with respect to making trades in the stock market. Automated virtual financial assistants are used for algorithms to monitor events, bond price, stock and trends according to the user’s personal portfolio and financial goals. Presently, Fintech companies are focusing on creating Robo Advisors, which tend to give an edge to modern investors and stock market traders.
Fraud Detection and Claims Management- Fraud detection and claim management is also a key important feature managed by AI. The Artificial intelligence component learns and monitors user’s behavioural patterns to identify the warning signs of fraud attempts and incidences. Machine learning techniques can be used in a different aspect to reduce the time and cost associated with the claims management process. Because of the self-learning ability, AI algorithms are great for fraud detection with the use of behavioural patterns.
Enhanced Customer Services- This is the most obvious and easiest integration of AI when it comes to Fintech in India. The key component of this integration is Natural Language Processing, which is used for learning algorithms and generates responses which are similar to a real human conversation and more natural in structure. However, technology will take time to become capable of replacing human resources fully. Some of the financial institutions have shared that there is a high probability of chatbots handling 80% of their customer interactions by the end year 2020.
Regulatory Compliance- Although conventional artificial intelligence provides a solution wherein the data is analysed, and predictions/calculations are made, there were not any explanations of the logic behind the decisions made by the system. However, it would now be possible to get the logic behind the decisions with the use of ‘Explainable AI’. For instance, if a loan application is rejected by an artificial intelligence system, then the ‘Explainable AI’ would provide the reasons behind this action.
Data Security- Fintech companies, are designing security solutions based on predictive analysis models wherein the system predicts security breaches and appropriate actions can be taken to prevent them. In the current scenario, the amount of data available increases and machine learning has the potential to identify, implement and analyse the required security measures.
Predictive Analysis- The artificial intelligence component helps to learn from the findings and make an improvement to the quality of the predictions. The Fintech companies which involve multiple transactions, statistics and details need predictive analysis that can save time, cost and efforts in various processes. Predictive analysis for financial services can directly affect overall business strategy, sales nurturing, revenue generation and resource optimization. Fundamentally, the predictive analysis makes predictions or suggestions based on trend identification and pattern analysis.
Credit Risk Profile Analysis- All financial service providers have to manage profiles of their clients. The evaluation of the credit risk profiles, appropriate services are suggested to the customers. However, manual management is time-consuming or may have human errors. With artificial intelligence, the integration and products/services can be classified based on the respective risk category, which can save considerable efforts and time.
Algorithmic Trading and Recommendations- In the Stock market, the slight change in the market lead to significant outcomes, which become challenging for people to keep up with the trends, backtest the information, and make an appropriate analysis. Machine learning algorithms and artificial intelligence are more than capable of processing huge volumes of data and provide recommendations. The requirement is to have enough data for backtesting, which help to analyse historical data and understand the trends, provide better recommendations to be made.
Artificial Intelligence in Fintech in India allows institutions and organizations to streamline services and make them customer-oriented with real-time data processing. Fintech companies now no longer use manual intervention to serve customers or address the concerns of users. In the Fintech industry, data security has huge importance and ensuring privacy is essential. Artificial Intelligence-based security solutions help to develop robust security systems.
Artificial Intelligence in Fintech in India has also given rise to Intelligent Process Automation which includes two different technologies, namely, Robotic Process Automation and Artificial Intelligence. The innovations in AI for Fintech might have more cost as now today, but for the long term, implications will give rise to a new way of automating processes.
Also, Read: How to use Artificial Intelligence in Lending.