How AI is transforming the world of finance
From barter to paper currency to plastic money to contactless cards, the world of payments has come a long way. AI promises to usher in a new world of frictionless and seamless payments
Financial risk control and management is one of the most definitive early applications of AI in fintech. Image: Shutterstock
The AI apocalypse is here. Across industries, segments, walks of life—one may not realise it but it is playing out large. Larger still is the opaque jargon and the hype around it. Not without basis though.
The race to reach the top has many participants—research institutes, top corporates, educational institutions, and even states around the world. Artificial intelligence-powered fintech startups are registering exponential growth and so is the venture capital funding for them. Adapting quickly to embrace digital and become an active part of the ecosystem is essential. Network-enabled co-creation is at the heart of the new digital transformation.
With the need to deliver better experiences and customer conveniences, AI enables better and faster fraud detection in a hyper-digitised world where PII (Personally Identifiable Information) is available for a few hundred dollars on the dark web. Advanced risk monitoring and fraud detection enables prediction and detection in real-time and not post factum.
From barter to paper currency to plastic money to contactless cards, the world of payments has come a long way. AI promises to usher in a new world of frictionless and seamless payments where the ubiquitous modern POS of today will look archaic. Amazon’s experiments to do away with the retail checkout queue are a good example.
The applications of AI include predicting consumer behaviour and enabling effective buying of hyper-relevant and personalised products, to offer tremendous opportunities to marketers of financial services.
Digitisation and decentralisation are at the core of powering the fintech revolution, enabled by AI. Besides AI, there is blockchain, robotic process automation, and data analytics which constitute other prominent technologies impacting fintech.
The structuring, delivery, and consumption of financial services have all been disrupted, courtesy AI, while the new technologies lend an umbrella branding to the fintech transformation. To capitalise on the opportunities being unleashed, it is imperative develop an enterprise-wide strategy and apply AI to revenue and customer engagement opportunities.
Financial risk control and management are the most definitive early applications of AI in fintech. It is helping restore trust in the financial systems and bringing inclusion with digital finance, bridging the gap between the hitherto unbanked and the banked. The pandemic has further hastened the pace at which AI adoption in fintech is becoming the norm.
The frontrunners amongst Indian fintech companies using AI include Razorpay (AI-powered system Third Watch helps address fraud issues); INDmoney (AI-driven financial advisory); CogNext (regulatory tech company using AI through automated tech platform, Platform X); Capital Float; Credit Mate; Lending Kart, and Mswipe.
Industrial revolution 4.0 will see a fusion of technologies across physical, digital and biological spaces, and will allow reinventing the firm around data, connectivity, analytics and AI, which removes traditional limitations of scale, scope and learning.