Over the years, banks have always embraced technological advancements to offer better services to individuals globally. Compared to traditional banking infrastructure, current banks have evolved a lot with the use of computers and internet-based financial services. However, the emergence of AI has altogether brought matchless innovations in the BFSI (Banking, Financial Services, and Insurance) sector. This technology has transformed banking operations in several ways which include providing customer support through chatbots, detecting sophisticated frauds, and more. It also enables banks to offer customized solutions, reduce risks, and operate more efficiently compared to other conventional methods.
Unparalleled Potential of Generative AI in the BFSI Landscape
What is Generative AI?
Generative AI is a subset of AI technologies that creates novel content, solutions, and data patterns. It generates original outputs depending on learned patterns, offering better results compared to traditional predictive models. Gen AI uses advanced machine learning algorithms, especially neural networks, to imitate and create new data.
In the banking and financial sectors, this form of AI plays an important role in identifying fraudulent activities. It identifies fraud by generating synthetic data and comparing it to real data. This further enables financial institutions to develop more effective fraud detection models. For instance, JPMorgan Chase, an American multinational finance company utilizes Gen AI to detect abnormalities in transaction data and prevent fraudulent activities. It has helped the company make significant cost savings and gain customer trust.
Generative AI in Risk Management
In the BFSI sector, AI has also contributed to managing potential risks. It analyzes recent trends in the market and predicts financial stability that enables banking institutions to make wise decisions. With the help of this technology, current-age banks can develop risk management plans that act as a preventive measure for them. Gen AI helps in checking transaction records against customary laws across the globe and comes up with compliance reports, enabling banks to avoid non-compliance penalties.
Automating Financial and Banking Processes with AI
Furthermore, the technology helps in automating various banking and financial processes. It makes data entry, updates the transactions of new clients, and many others. Furthermore, AI allows banks to automate repetitive manual activities such as customer service through automated software tools. Nowadays, modern banks are also integrating Gen AI in most of their services including internal operations and financial accounting systems to reduce operational costs and human errors.
AI-Powered Wealth and Investment Management
Moreover, some have started using this technology in wealth and investment management through AI-powered robo-advisors. They offer low-cost financial services without human intervention in various processes. For example, software based on Gen AI helps automate an investment strategy based on historical stock market data and other genuine information sources. This further helps banking institutions to make intelligent decision-making, enhancing the performance of client portfolios through personalized advice.
AI in Transforming Neobanks with Personalized User Experience
The creative potential of AI comes with its capacity to learn from user interactions. This helps neobanks to design apps, matching individual customers’ changing preferences and behaviors.
- Customized App Dashboards: For instance, if a user often checks their investment portfolio, AI helps to reorganize the dashboard of the application, prioritizing investment features. This enables them to easily access the app and perform further operations.
- Optimized Services for Common Actions: Likewise, if a user transfers money internationally, the app adapts to make these services more evident. In this way, AI plays a key role in optimizing users’ banking experience.
This promising potential of AI is anticipated to boost the growth of the global AI in BFSI market in the upcoming years. As per a report published by Allied Market Research, the industry is predicted to rise at a CAGR of 32.5% from 2023 to 2032.
Recent AI-driven Acquisitions in Fintech
Niyogin Fintech’s Acquisition of SuperScan
In May 2024, Niyogin Fintech Ltd., a public-listed fintech company announced its acquisition of the AI platform, namely, SuperScan of Orbo, a leading Gen-AI-based retailer. Manoj Shinde, the CEO of Orbo, said that Niyogin Fintech is expected to gain huge benefits from its AI-powered document imaging, automation, and fraud detection platform. He added that this agreement is going to be helpful for both firms to expand their offerings with the changing regulatory landscapes.
Aurionpro Solutions’ Acquisition of Arya.ai
Similarly, in April 2024, Aurionpro Solutions Limited acquired Arya.ai, a leading banking and insurance firm. With this agreement, Aurionpro aims to expand its portfolio of fintech offerings by adopting AI. This acquisition is expected to equip Aurionpro with advanced financial solutions based on AI, intelligent automation, deep learning, PaaS, and various other tailored industrial solutions. Further, the company also plans to cater to the growing demands of banks and insurers by offering reliable, accurate, and auditable solutions.
Final words
AI has significantly transformed various functionalities in the BFSI sector with greater productivity, safety, and improved customer satisfaction. Moreover, the growing demand for user-friendly interfaces for online and mobile banking to improve customer engagement is expected to create wide opportunities in the industry.
Author’s Bio: Although belonging to an engineering stream, Rosy had a knack for writing throughout her student life. Her keen interest in creative compositions drove her to take up content writing professionally after graduation. For the last few years, she has been delivering impactful content, engaging and delighting readers, along with grabbing their attention.
✍ **𝑨𝒓𝒕𝒊𝒄𝒍𝒆 𝒘𝒓𝒊𝒕𝒆𝒓: Rosy Behera
