Digital Payments are estimated to grow at a rapid pace to account for more than 70% share of all payments by 2025. The continued innovation and increased performance in digital technology, consumer demand for one-touch payments, policy push towards financial inclusion, desire to marginalize cash, and an exponential rise in digital applications and services are the mega-trends that are driving the Digital Payments revolution.
This increase in the digital transactions has led to the growth in breach of data in 2021 by 10% YoY, with the average amount of financial damages caused to a record $4.24 million. Fraudsters who obtain this information can carry out various kinds of frauds, ranging from locking the users out of their online accounts to full-blown identity theft.
AI is by far the most effective preventive measure against financial fraud, as it can review huge amounts of data to identify the risk patterns. Suspicious activities and individuals can then be separated for further review to distinguish between actual fraud and false positives. Artificial intelligence is being actively used to reduce the latest financial crime in bonuses from new deposit accounts or credit cards, as well as monthly subscription purchases made online. The Fintech industry is one of the first to embrace data science. It makes extensive use of algorithms to create services that are both faster and more precise than those provided by traditional banking institutions. The payment industry is increasingly being driven by information and data, as technology is the backbone of the Fintech sector, allowing financial institutions to quickly respond to changing customer preferences and emerging trends to drive future growth. The ecosystem, which includes loan issuers, credit card companies, retailers, and insurers, has recognised that big data processing techniques will not only simplify complex tasks like risk management and financial inclusion but will also enable Fintech players to better serve potential customers.
Benefits Fintech industry can reap by using AI:
- Stronger Security: AI in cyber security comes in the form of chat-bots that convert FAQs into simulated conversations. They have the ability to reset forgotten passwords and grant additional access as required. Artificial intelligence can analyse large amounts of data and improve successively over time using machine learning. Artificial intelligence is being used to identify fraudulent activity, and suspicious transactions, and provide a boost to processing sensitive financial documentation, reducing security risk, by being able to discern patterns and suspicious behaviors.
- Enhancing operations through automation: AI has the ability to generate financial reports much faster and with a lower risk. It has the technological capabilities to provide employees with tracking and automating processes, data entry, fraud and security. It has the ability to watch, learn and verify events for anomalies.
- Improved customer service: Artificial intelligence has improved customer service, which is one of the most prominent areas of fintech. Transactional calls and traditional helplines will become less important as deep learning algorithms and AI’s ability to understand human language and formulate convincing responses improve. AI can understand and follow workflows with minimal risk of error or duplicated processes, resulting in significant reductions in manual management.
- Analytics and insights: AI provides Fintech companies with game-changing insights, which are reliant on collecting and processing client data. Artificial intelligence (AI) solutions are extremely useful for fraud detection and claims management, as AI tools are used to track behavior patterns and detect fraud by identifying warning signs. AI systems can adapt and incorporate undiscovered cases into their detection capacities over time with their self-learning abilities. Virtual assistants and chatbots: Fintech firms provide appropriate data and advice for each transaction. Personalization is becoming increasingly important in the fintech sector as the cost of labour in offshore outsourcing and robotics has increased. Chatbots and assistants powered by AI can reduce costs, as text-based personal assistants provide expertise and human-like interaction without having to increase the manpower.
- Automatic Damage assessments and claims management: Fintech firms provide damage assessment for assets like cars, mobile devices, goggles, shoes, cycles and many other kinds of assets in case of accidents or mishandling. However, it requires a lot of manpower and at times logistics costs as well which becomes a huge cost for both customers and companies both. However, computer vision-based Artificial Intelligence solutions mitigate the need for manpower involvement and decrease logistics costs to a great level thus benefitting the brands positively on the bottom line while taking the customer service experience too to the next level.
As technology continues to rapidly advance, artificial intelligence might be the future of the Fintech industry. The ability to conduct financial transactions without the use of a traditional banking intermediary, technology is no longer centralised to monolithic databases and transaction engines. It is all about giving customers and employees the freedom to work smarter, make better decisions, and focus on what matters most. It is the best time to embrace the potential of AI as the driving force for the growth and development of the Fintech businesses.
About the author:
Vishal Singhal is the Co-Founder, CellStrat.