AI Growing within Financial Institutions

By Abhishek Rungta, CEO, Indus Net Technologies

Frankly speaking, a cou­ple of years ago, Artifi­cial Intelligence (AI) and Machine Learning (ML) were mostly discussed in labs or within university premises. Today, we are witnessing a distinct and dramatic shift in the FinTech eco­system, thanks to these two budding technologies. These technological in­novations are increasingly becoming mainstream. AI and ML are being discussed on social media platforms, which clearly indicate the popularity of these innovations among the mass.

The financial and insurance sectors have started im­plementing these two hot technologies into their system and services. A study says that investment in FinTech organizations increased by nearly 10 per cent in 2016. China is leading from the front in this FinTech land­scape. The country has secured nearly USD 10 billion and is said to have accounted for 90 percent of invest­ments in Asia-Pacific. This is, indeed, an inspiring figure and gives a much-needed and enthusiastic push to the tech startups, which are developing new tools to get a strong foothold in the FinTech market.

We can expect a robust change in the way we invest our money in the coming five years especially with the way tech giants and venture capitalists are injecting cash into these technological advancements. I also think, in the next five years, more big players in the insurance and financial ecosystem will join the race and will empower the agents and brokers, quicker the claim management procedure, change the way insurers interact and gain information from the customer and increase the effectiveness of analysis and interpretation.

India warming up to these hot in­novations in FinTech

India might not be a front-run­ner in embracing AI but the way startups and big players in the banking sector are adopting this technology, I am sure the picture will change for the better within the next few years. At least, a study, which forecasts that India’s FinTech will be worth USD 2.4 billion by 2020, reinstates our belief in the disruptive power of the technology.

It’s encouraging to see how the government and bank­ing institutions are also coming forward to adopt the technology in FinTech arena. I am sure the financial ser­vice space will get a massive push in India when Singa­pore’s Lattice80 FinTech hub starts its official operation in Andhra Pradesh.

AI coming to the rescue of the insurance companies

We live in an era where data and information are created at an unprecedented pace. Banks and insur­ance companies deal with massive amount of data. This is where AI and ML come into the picture and can

smoothen the process of information gathering, data storage, data cleansing, analysis and interpretation. ML and AI can evaluate the unlimited amount of data and banking transaction in real-time. Also, these techno­logical advancements help the insurance companies to get away with unessential data. This will increase accu­racy by eliminating human error and reduce the number of repetitive tasks. Thus, the process of operation will be cleaner and faster. This will also leave the insurers, agents, and brokers with enough time to come up with strategic and analytical, personalised solutions for the customers.

Detecting the fraudulent transactions

I remember reading that in 2014 insurers detected more than 130,000 fraudulent claims. We all know that frauds are common in insurance and finance sectors. I also un­derstand that it’s not humanly possible to identify the pattern in millions of transaction that take place in a banking or insurance company.

However, thanks to technology, the banking institu­tions have found the much-needed respite in the form of AI and ML, which help them to identify rare patterns in a huge amount of financial data, thus giving warn­ing signs of fraud attempts. In fact, banking institutions around the world are using the disruptive potential of AI and ML to detect fraud. FinTech companies are heavily relying on AI to monitor the transactional behaviours leading to frauds. The technologies help in discovering the process of card usage and prevent fraud in real-time. MasterCard has implemented AI to prevent fraud and PayPal also uses machine learning technology to study the purchase history of the user.

We all know millennials want everything at their disposal at the speed of light. And this Do-It-Yourself model is ideal for millennials because they can invest a small amount of money and make the process of in­vesting speedier. And millennials love the fact that they don’t want to undergo the strenuous job of filling up investment-related forms in case of appointing the robo-advisors. The digitally active youngsters also like the fact that robo-advisors have a user-friendly interface. I am certain that banking and financial institutions will ex­pand their use of robo-advisors especially for the millen­nials in the next three years.

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