According to a report by the World Economic Forum, 79% of executives believe that AI and machine learning will revolutionise industries by 2025. Furthermore, according to KPMG, the anti-fraud engines run by AI (Artificial Intelligence) can reduce fraudulent transactions by up to 40% on top of the existing AI fraud prevention measures for the benefit of banks, and merchants among others. AI is rapidly reshaping the financial technology sector, driving innovation and efficiency across various aspects of the industry. “AdvaRisk integrates Generative AI into its solutions that solve several problems for its banking clients. We use Deep Learning models and Language Learnings Models (LLMs) to standardise property record data across India, which are originally written in local languages using different conventions,” Pranav Patil, chief data scientist, AdvaRisk, told BrandWagon Online.
AI’s influence in fintech is perhaps most visible in the realm of fraud detection and prevention. Cybercrime accounts for $ 600 billion annually which is approximately 0.8% of the global GDP, Infosys reveals. Furthermore, Infosys reported that fraud attempts rose 149% in the first quarter of 2021. As a result of this, more than half of all the financial institutions have stepped up to employ AI to detect and prevent fraud in 2022. Machine learning algorithms analyse transaction patterns in real-time, identifying anomalies that could indicate fraudulent activity. This proactive approach not only helps in mitigating risks but also enhances the security and trustworthiness of financial transactions. “The AI-powered platform streamlines the end-to- end collateral management process, making it more efficient and accurate, which is critical for banks looking to reduce risks and enhance efficiency,” Patil added.
Risk management is another important area where AI is reportedly making a significant impact. AI technologies assess financial risks by analysing vast amounts of data, including market trends, credit histories, and macroeconomic indicators. This advanced analytics capability enables financial institutions to make more informed decisions, manage exposure effectively, and navigate volatile markets with greater agility.
“AI- driven personalisation has considerably helped our banking clients make the processing of these loan applications faster by 5X,” Patil said. Customer service in fintech is also changing because of AI. Chatbots and virtual assistants are now commonplace, offering 24/7 support and handling a variety of customer inquiries. A study by Juniper Research revealed that Chatbot integration in mobile banking apps will be a dominant channel for chatbot driven customer communications, accounting for 79% of successful interactions in 2023. “AI handles routine interactions such as answering FAQs, guiding users through the investment process, and providing real-time updates on portfolio performance. Human agents step in for more complex issues that require nuanced understanding or personalised guidance, ensuring a seamless blend of efficiency and empathy,” Vikas Verma, CTO, hBits, said. These AI-driven tools provide personalised assistance, streamline support processes, and reduce wait times, significantly enhancing the overall customer experience.
According to PwC, the greatest economic gains from AI will be in China, with a 26% boost to their GDP in 2030, and North America, 14.5% boost, coming to a total of $ 10.7 trillion and accounting for almost 70% of the global economic impact. The automation of routine tasks is further accelerating operations efficiency in fintech. “AI-driven personalization has significantly increased customer satisfaction by tailoring our offerings to individual preferences and behaviours. By analysing customer data, AI helps us provide personalised investment recommendations, content, and support, resulting in higher engagement and loyalty,” Verma added. AI technologies automate processes such as data entry, report generation, and transaction reconciliation. This automation not only reduces human error but also frees up valuable resources for more strategic tasks.
As AI technology continues to evolve, its integration into fintech underlines a future with greater advancements, paving the way towards a more efficient financial landscape.