Legacy systems and fearless new startups in the BFSI (Banking, Financial Services and Insurance business) sector faced many difficulties due to the epidemic. Businesses who adopted digital transformation, incorporating AI (Artificial Intelligence) and other cutting-edge technologies to speed up operations and serve customers without a hitch, set themselves apart from others that failed.     

The market for AI in the BFSI sector was worth over USD 15 billion in 2021, and it is expected to expand at a rate of over 35% CAGR from 2022 to 2028.    

AI and BFSI   

Many of us confuse AI with chatbots; however, it's more than that. During the pandemic, the biggest worry for the BFSI sector was how to serve the customers' needs without any problems. This was where AI stepped in to respond to inquiries, process information quickly, and develop new services that cater to every customer's unique needs. According to the PwC-FICCI report titled "Uncovering the ground truth: AI in Indian Financial Services," a staggering 83 per cent of survey respondents stated better customer experience as the justification for AI implementation.  

For a long time, the banking industry has struggled with ineffective management and operations. Businesses concentrate their AI efforts on linking fragmented data because of the unnecessary human labour caused by segregated management. It is difficult for banks to integrate and use structured and unstructured data in real-time. Sometimes the same products are supplied to customers with various requirements.  

Additionally, the misuse of personal data in the BFSI domain remains the top concern and may be fatally misused if it gets into the wrong hands. It is our responsibility to ensure that the client's trust is never compromised. With anomaly detection, AI not just protects data security, but with its anomaly detection capabilities, it can spot irregularities before they become fraud. Further, the systems can be streamlined with machine learning and AI techniques, reducing the likelihood of fraudulent activity and data theft.  

Personalisation is crucial for the BFSI sector due to the ever-changing CX and real-time data processing. Banks are able to make wise decisions based on a customer's buying history, each with something that looks particularly relevant, thanks to behavioural and data science-driven real-time insights. For instance, since it is crucial to generate and capture fresh data regularly, banks can set up a data infrastructure with three components: input, platform, and sharing. This might entail collaboration with outside parties. Banks will create algorithms to discover behavioural patterns, model customers' tendency to purchase a product and provide timely goods and services by combining all the data.  

Besides faster data processing, fraud detection, and better customer service, AI opens the door to a wider range of technological advancements like NLP (Natural Language Processing), robotics, and cognitive systems that boost profits, improve customer satisfaction, and open up new business opportunities. In comparison to 2020, global investments in the fintech sector increased by almost 68% in 2021. Additionally, the need for AI in the BFSI industry has been boosted by the incorporation of AI into the BFSI toolchain in numerous digital financial services.   

Faster customer onboarding is made possible by AI-powered technology like Optical Character Recognition, which automatically extracts user information from uploaded identity documents to fill out forms. Furthermore, by utilising several data points from diverse sources, including income records, employment histories, credit scores, and bank statements, AI enables accurate and thorough credit risk profiling. Overall, with AI's tremendous capability, banking and financial services companies can now offer frictionless, creative, and more enjoyable consumer experiences.