{"id":15740,"date":"2019-04-26T18:33:12","date_gmt":"2019-04-26T13:03:12","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=15740"},"modified":"2023-06-07T17:15:07","modified_gmt":"2023-06-07T11:45:07","slug":"impact-of-artificial-intelligence-ai-on-financial-service-landscape","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/impact-of-artificial-intelligence-ai-on-financial-service-landscape\/","title":{"rendered":"Impact of Artificial Intelligence (AI) on Financial Service Landscape"},"content":{"rendered":"

Artificial Intelligence<\/a> (AI) has become an integral part of the finance industry as it gives a competitive edge to the industry and helps in preventing fraudulent transactions. Not only this, it reduces the cost of human resources from analysis to monitoring. Here in this article, we will talk about the impact of AI on fintech services in detail. <\/p>\n\n\n\n

Importance of Artificial\nIntelligence (AI) for Financial Institutions (FIs)<\/strong><\/h2>\n\n\n\n

Financial institutions like banks and NBFCs generate revenue through lending, which involves risk as these financial institutions can not sanction loans to anyone. Therefore, such financial institutions provide credit by verifying the creditworthiness of prospective borrowers, which depends upon the CIBIL score<\/a>. <\/p>\n\n\n\n

There are large numbers of potential buyers in the market<\/a> who are deprived of loans due to bad credit history, but it doesn’t mean that they are defaulters. If financial institutions ignore such types of borrowers, it affects their business. <\/p>\n\n\n\n

In all, we can say that the CIBIL<\/a> score should not be the only way of judging the Creditworthiness of the borrower, and to overcome this, a vital role is played by Artificial Intelligence (AI) by verifying the re-payment capabilities of the borrower. In the financial sector, the digital credit evaluation system is undoubtedly a twist. <\/p>\n\n\n\n

How do Financial Institutions work?<\/strong><\/h2>\n\n\n\n

Lending institutions such as banks or NBFCs use credit scores before deciding on lending to the borrower. Usually, lenders use different types of models to check the borrower’s transaction history with other financial institutions, and the credit score is calculated using such models based on the structured data which is provided by the statistical analysis. <\/p>\n\n\n\n

Now, banks & NBFCs<\/a> are using a more holistic approach before sanctioning loans. They are using data from different sources like social media activity, phone usage, and text message activity to ascertain repayment capability. <\/p>\n\n\n\n

Nowadays, there are numerous tools which help in deriving credit scores on the basis<\/a> of various qualitative factors such as consumer behaviour and willingness to pay. In this way, lenders can now take a credit decision in a much quicker and more accurate way. <\/p>\n\n\n\n

What are the benefits of<\/strong> Artificial Intelligence (AI) for Financial Institutions?<\/strong><\/h2>\n\n\n\n

There are numerous benefits of Artificial Intelligence (AI) for Financial Institutions; some of them are as follows:<\/em><\/strong><\/p>\n\n\n\n