Over the last few years, artificial intelligence or AI-backed technology has become commonplace in most industries across the world. India also has adopted the use of artificial intelligence in FinTech to offer personalized services to customers, increase efficiency, improve security, and reduce risks.
Banks, financial institutions, and FinTech companies in the country are investing heavily in artificial intelligence and experimenting with its uses, given that users have become more receptive to such technology.
This has led to FinTech companies leveraging the most out of technology by offering consumers with financial services such as comparison of credit cards, ease of application process, paperless loan approval (opens in a new tab/window), savings, and other investment options.
Let’s take a look at a few ways through which the deployment of artificial intelligence in FinTech has already transformed the financial sector in India and the challenges that come with its usage.
Top 5 Ways Artificial Intelligence in FinTech has Transformed the Indian Financial Sector
While there could be multiple ways artificial intelligence in FinTech has transformed the Indian Financial Sector, the following are the top 5 amongst them. Here you go!
Banks, financial institutions, and insurance companies in India have begun to use artificial intelligence (AI) and machine learning (ML) backed technology for risk assessment and underwriting purposes. Using such technology eliminates the risk of human error and provides results that are far more accurate in a timely manner, without the company having to incur additional expenses or employ more resources for the purpose.
A number of asset management companies use AI to offer investment advice digitally to prospective investors. The technology collects information from investors about their appetite for risk and their investment/financial goals.
Once this is done, based on the data that is collected, the concerned individual will be offered personalized investment advice, thus helping the individual make an informed choice. In many cases, even the management of assets is completely automated with the help of AI-backed technology that investment firms have started to use.
Given the quantum of money that is transacted on a daily basis, cases of fraud and money laundering can have an extremely negative impact on the financial health of the company. Thus, financial institutions in the country have adopted AI and ML-driven processes, which can pick up any irregularities in the system.
Such processes have been of much help in detecting cases of fraud and reducing false positives.
Enhanced Customer Experience
Off late, a number of banks and financial institutions in the country have started to include interactive chatbots on their websites to provide a personalized experience to users who require assistance.
These chatbots are capable of answering queries, give product recommendations, offer transaction-specific answers, transfer or send money to another account, locate the closest branch or ATM, check eligibility, etc.
Stock Market Predictions and Trading
Asset management companies in the country use artificial intelligence on a daily basis to predict stock market changes and movements. AI-backed technology can assess data and the prevailing market conditions and provide predictions that can benefit both the company and the customers.
Challenges in the Use of AI in the Indian Banking and Financial Sector
Although AI has seen a favorable response in the Indian financial sector, it does come with its own set of challenges. A few challenges that currently present itself are as follows:
In a country like India, where numerous regional languages are spoken, one of the primary challenges that are faced in the implementation of AI-backed tools and applications on a large scale remains the language barrier.
Any application that uses natural language processing techniques will face challenges due to this. To avoid this, financial institutions can develop applications that support at least a few regional languages.
Availability of Information
For AI-driven technology to make the right predictions, it is necessary for financial institutions in the country to have accurate and verified information of their customers. Any unverified information that is present in the system could cause major lapses and lead to inaccurate prediction.
The scarcity of a Trained Workforce
The scarcity of human resources who have the skills to use such sophisticated technology is a major area of concern. For AI-backed applications and tools to be put into effect and used on a large-scale basis, the company should have an adequate number of employees who have the right skills and are familiar with the technology.
Large-scale adoption of artificial intelligence in the banking and financial sector may lead to an unemployment crisis. To avert this, sufficient job opportunities should be created within the organization and outside.
Privacy and Security of Data
Most applications that make use of artificial intelligence require a high volume of data, which, in many cases, is of an extremely sensitive nature, thus making companies that use such technology more susceptible to security risks.
From detecting fraud to helping with investment decisions, artificial intelligence in FinTech has caused a significant impact across the financial industry. Although it is still in the nascent stage, artificial intelligence has the ability to truly transform the financial sector.