Impact of Artificial Intelligence in the BFSI segment
Upkar Singh, IT Leader, Fidelity Information Services India Pvt Ltd
The scale of customer base in India perspective is –
• India will become the third largest domestic banking sector by 2050, after China and the US, according to a report
• With India’s working age population set to increase over the next decade, it promises exponential growth.
• According to IBEF data, India’s mobile wallet industry is estimated to grow at a CAGR of 150 percent to reach USD 4.4 billion by 2022
• Whereas mobile wallet transactions will touch USD 490 billion by 2022.
To take advantage of this growth, the Indian Banking and FSI industry is placing its bets on disruptive technology such as RPA, blockchain, AR/VR and AI. The efforts are still in pilot phase for banking players. But with the sector’s rising interests towards capturing customer share, technology is set to play a leading part in shaping the industry’s future.
AI may be the next big thing for many industry sectors, but banks are veteran users of this technology.
AI can serve customer in few areas such as - Building customer trust and confidence, Cost and operations optimization, Improving compliance with regulations.
AI is radically transforming the front- and back-office operations of financial institutions in many such ways like -
• Cost centres to profit centres: AI enabled back-office functions will allow financial institutions to turn their centres of excellence into services, while pushing them to outsource most other capabilities. As financial institutions move towards a back-office as-a-service model, these processes will continuously learn and improve using data from its collective users.
• A new battlefield for customer loyalty: Past methods of differentiation for financial institutions such as cost, speed and access are eroding. AI is giving rise to a new set of competitive factors on which financial institutions can distinguish themselves to customers.For example, the ability of institutions to optimise financial products/services by tailoring, recommending and advising customers will allow them to compete on value offered.
• Self-driving finance: Financial advice, part of every product, is often generic and impersonal, relying on subjective advice from customer service agents. A self-driving vision of finance could transform the delivery of financial advice, centring customer experiences around AI.AI enables this vision in three key ways: empowered platforms which can compare and switch between products and providers; increasingly personalised advice based on data; and continuous optimisation through algorithms which will automate most routine customer decisions.
• Collective solutions for shared problems: While AI presents increased opportunities for competition, it also presents a strong mechanism to collaborate as the value of shared datasets is tremendous. There is great potential for cross-institutional collaboration on issues such as fraud prevention and anti-money laundering controls, which are often run inefficiently and ineffectively today.
Customer Expectations -
45% of digital-savvy consumers would like their bank to introduce new ways of communicating like wearables or virtual reality.
AI is rapidly reshaping what’s necessary to build a successful business in financial services. In the future, financial institutions will be built on scale of data and the ability to leverage that data.