AI Growing within Financial Institutions
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.