By Deepika Loganathan
In the ever-changing business world, ground-breaking technologies continually shape our lives. The internet and smartphones transformed the late 1990s and 2000s, leaving a global impact. Now, artificial intelligence (AI) is taking the lead, revolutionising industries, particularly finance. Its remarkable capabilities are redefining the financial sector with limitless potential. This article highlights the innovations AI is bringing to the fintech ecosystem.
One of the most significant ways AI is transforming the fintech industry is through personalised financial services. With AI becoming an integral part of businesses, building dedicated research teams to harness its potential has become crucial. AI-powered chatbots and machine learning algorithms enable fintech companies to provide swift and personalized customer service, enhancing the overall user experience.
Generative AI, though slow, is set to be a game-changer. As we transition to new models, AI-based products will revolutionise how we underwrite customer service products. Gen-AI-powered fintech products are poised to become the next big thing. However, it is essential to acknowledge the rising alerting risks and address potential limitations that may arise.
The fintech industry's adoption of AI and computing power is occurring simultaneously with an upsurge in scams and fraud. AI software can now produce fake identification documents with astonishing accuracy. Staying one step ahead of scammers has become challenging for fintech companies, necessitating constant efforts to identify and prevent fraudulent activities.
Another area where AI is creating a significant impact is financial inclusion through alternative lending. The alternative lending segment is witnessing remarkable growth, and crowd lending is leading the way. The seamless and tech-driven experience alternative lenders offer attracts micro, small, and medium enterprises (MSMEs) looking for superior customer service. Digital lending platforms have made the loan application process effortless, providing an accessible option for underserved populations.
AI and alternative data play a crucial role in underwriting and tailoring financial products to suit the needs of underserved populations. By leveraging Open Banking APIs and alternative data, fintech companies bridge the financial gap and offer essential financial services to individuals and businesses previously excluded from traditional banking services.
Embedded finance and payment innovations are also reshaping the fintech landscape. These developments simplify customer payments, open new markets for businesses, and enhance the overall fintech experience. Staying competitive in the market, fintech companies continuously invest in cutting-edge data science and AI technologies, ensuring efficiency, accuracy, and improved customer experiences.
The decentralised finance (DeFi) revolution is another groundbreaking development in the fintech space. Powered by blockchain and smart contracts, DeFi platforms provide a wide range of financial services without the need for traditional intermediaries. This opens up opportunities for global financial inclusion and gives users complete control of their assets. However, the full optimisation of products based on DeFi and blockchain in mainstream fintech is still a work in progress.
While DeFi has its challenges, generative AI presents numerous use cases. Its ability to reach out to people in different tones, languages, and attitudes and understand them in real-time for fintech predictions is a promising aspect of this technology.
Embracing AI and continuously advancing technological capabilities offer Indian fintech companies a unique opportunity to address structural issues, expand the market, and drive long-term changes in the financial industry. Their nimble and innovative approach positions them to outpace traditional incumbents, making them leaders in the financial revolution.
Vantage view
The future of fintech is bright, thanks to the incredible potential of AI. By analysing data in real time, AI uncovers invaluable insights and identifies patterns that elude human capabilities. This translates into enhanced business efficiencies, leading to a superior customer experience.
From bolstering protection against fraud to revolutionising wealth management and simplifying digital payments, AI holds the key to transforming the landscape of financial services. As the world embraces this game-changing technology, the journey ahead promises to be filled with boundless possibilities and extraordinary advancements. The power of AI is steering the course toward a new era of innovation in fintech.
The writer is the co-founder and CEO of Haive.
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