Transformative role of AI in digital financial services

AI is already being used in Indian financial services via chatbots, RPA, credit sanctions, ID verification, fraud check and claim processing. But, it’s still not a major driver of either business or cost reduction as most projects are in early stages of launch, says Varun Sridhar, Lead realme PaySa.

AI is a big word, most don’t understand it and even fewer actually know how to work with it and very limited set of companies or people actually deploy Artificial Intelligence to a feasible purpose. In Indian financial services, the coffee corridors have a lot of chatter on AI, Machine Learning, Natural Language Processing and so on. Over the past few years this chatter has led to quite a few interesting use cases and we can now start to say some companies are able to demonstrate some very cool use cases.

What’s the driver behind AI becoming the new gold? Three factors. First: Increased availability of data/digital footprints/triangulated data. Second: Availability of skilled data scientists with a willingness to disrupt leveraging data. Third: Abundance of PE/VC funds or corporate willingness to invest in transformative projects even if the payback period of 4-7 years. There is a strong realisation amongst CXOs that machine learning could be an important competitive advantage and yield high returns. So the race in India is now on!

At realme PaySa, we are trying and piloting multiple small projects and currently evaluating how we could use AI/ML to solve something for our consumer. It is important at the end to either save costs for customer or for us or improve accessibility to financial products or improve the user experience. We are very clear that technology and data projects are cool but sustainable only if they generate value for some or all stakeholders. As a leading smartphone company we see ourselves as a TechFin with access to hardware, software and consumer data and want to bring magic to the customer, always respecting their privacy, sharing preferences & data security.

AI is already being used in Indian financial services by both FinTechs and large players in chatbots, automating repetitive processes/decisions or RPA, credit sanctions, ID verification and fraud check, claim processing. However, it is still not a major driver of either business or cost reduction as most projects are in early stages of launch.

In retail financial services, we see the following use cases where AI can become a complete game changer and work well for both the financial institution and consumer.

A different APP for every user: In financial services we make one APP and expect a young digital adult, a mid-30s family man working at a manufacturing plant, an old couple, a businessman and everyone else to follow the same journey. What if the banking app could recognise you and automatically make an APP that perfectly fits you, like your custom tailored suit! This is possible and requires combining TBs of data and as your evolve from being in college to getting your first job to getting married, the APP auto evolves. Imagine what this could do for security, customer education, simplicity and so on!

Lower pricing depending on who you are and what you do: Health insurance, personal loans, car insurance, credit card interest rates, fee charged to manage mutual funds and many more charges in banking are standard for all customers. If your phone could automatically share carbon footprint or activity tracker or sleep patterns or financial transaction data with relevant financial institutions then the yearly life insurance premium for a customer could up or down depending on his well-being index real time! Or you could get a loan cheaper because AI helps identify that the probability of default for this customer is far lower than normal.

Growth of AI in the Indian FinTech industry also brings some challenges such as data privacy, unfair competitive advantage or incorrect decisions as human emotion is still a mystery and data sometimes does not represent why people do what they do. We expect in India in the coming years much more regulation, many success stories of how AI made a FinTech the next unicorn and we hope as realme PaySa to be able to implement a few use cases ourselves.