The AI in BFSI market is expected to witness rapid growth in the coming years on account of the global digital disruption, rising need for better risk management, and increasing adoption of chatbots to enhance the experience of customers. A wide array of artificial intelligence solutions are being used in the banking, financial services, and insurance industry as people become increasingly digital and demand better services and facilities over the internet.
Currently, the chatbots category holds the largest share in the AI in BFSI market, on the basis of solution. With more people availing of banking services or connecting with such entities online, firms are using chatbots to offer non-stop customer support, quicken the response, reduce the scope for error, achieve a higher accuracy of data, and improve customers’ satisfaction. Chatbots have been around for some time, but for even more-efficient operations, they are being integrated with AI.
Among the various AI technologies being used in the industry, machine learning has been the most popular till now, and it will continue being so in the near future. ML is a kind of computer program that learns from its operations and improves itself over time. BFSI companies use it to gather customer data from their emails, social media accounts, the company’s website, and mobile apps and other platforms where they engage with customers, for analysis, so that relevant information and better services can be automatically provided.
The biggest growth driver for the AI in BFSI market is the rising internet penetration around the world. Driven by government initiatives and the efforts of private companies, 56.727% people on earth had access to the internet in 2019, compared to 6.734% in 2000, says the World Bank. This has been accompanied by the rising sale of smartphones and tablets, especially in developing countries. Both these factors, combined, have urged all kinds of companies, be it retail, healthcare, manufacturing, or BFSI, to get an online presence via websites and mobile/desktop apps.
Similarly, the most-significant AI in BFSI market trend is the usage of such advanced solutions to combat fraud. As per the U.S.-based Insurance Information Institute, in 2020, the country reported 365,597 credit card/personal account frauds and 99,667 business/personal loan frauds. The BFSI sector has always been on the forefront of combatting online fraud, for which advanced AI technologies are now being used. For instance, Citibank Group, one of the largest BFSI companies in the world, has adopted automated ML and big data to improve risk assessment and combat cybercrime.
Therefore, the AI in BFSI market is dominated by North America, which is home to some of the largest firms in the BFSI sector, such as Citibank, Bank of America, and JPMorgan Chase. Since these companies are well funded, they have enough to spend on AI solutions, which are generally expensive. Moreover, the U.S. BFSI sector is a key area of interest for cybercriminals, who significantly increased their malicious activities during the pandemic, luring people with fake government benefits and insurance schemes.
Over the coming years, the highest CAGR in the industry is projected for the APAC region, which is witnessing a swift digital transformation. This is enabling more people to access BFSI services via the internet, thereby prompting such firms to adopt advanced cyber technology to make their experience better. For instance, State Bank of India introduced the SBI Intelligent Assistant in 2017 in order to enhance customer services.
Therefore, with the rapid digital transformation of the BFSI sector, the adoption of AI solutions here will rise.
