How Will AI Shape the Post-COVID Future of Financial Services in India?

The finance industry embraced technology with open arms ahead of time, only to earn an early mover advantage. The result is promising changes in the finance landscape.

Today, products like chatbots, automation, data analytics, cybersecurity, and more are questioning India’s future in financial services.

Technology battled the challenge of financial inclusion that the pandemic brought forth with Artificial Intelligence or AI piloting the initiatives such as gathering data.

It is now time to make sense of the data hence gathered. So let’s explore the possibilities of how AI could shape the future of financial services in India.

Stakeholders Spearheading AI-Driven Solutions in Fintech

AI has a significant footprint on nearly all sectors but with varying degrees. For instance, investment banks have been the major player in AI adoption. Leveraging NLP and ML, they have shaped how AI can be adopted.

This is followed by the retail banks, which have grown accustomed to using predictive analysis to support customer retention initiatives. It includes the process of mining present and past data and statistics to predict future behavioural patterns.

Banks construct strategies to retain customers by delighting them based on the likely customer behaviour. The industry players probably lagging are insurers, maybe because of the limited set of products.

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Other AI-based technologies that banks use are anti-money laundering, anti-fraud, compliance, credit-underwriting, and smart contracts technology.

Some AI Implementation Efforts Companies Bank On

The adopters of AI have reaped some fantastic benefits by deploying it into their business strategy. In a nutshell, AI backs up innovative efforts to launch new products and services or even find and enter a new market of opportunities.

Presently, the extensive benefits of AI in the finance sector feature lower operational costs, data-driven decisions, predictive analytics, and ramping up employees’ working capacity.

There’s more: AI enables better product curation, improved risk management, elevated marketing services and high customer satisfaction.

This is our affirmation that AI would help companies break beyond the boundaries that legacy players planted.

For instance, insurers are expected to experience the highest AI adoption rate. This is because they have the most room for adoption as they lag and have a limited product range. As a result, the next five years can be a significant game-changer in the face of insurance products.

How can companies invest in AI?

AI cannot bring disruptions if not invested strategically.

Therefore, organisations need to evaluate the success AI can help procure for them. It is a critical aspect to consider for business strategy.

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But, how can a company evaluate the success of the application?

There are three reliable metrics that the existing users of AI believe in. Pinning the most reliable metric to track the views here might get contradictory, but here we are, with the top three metrics:

1. Customer satisfaction – Some companies believe the success of AI ultimately boils down to the customer or stakeholder’s satisfaction. Any improvements in the level of satisfaction show AI’s potential in action. Some great examples of measuring AI success lie in NLP and ML, including tools like automated chats and requests for quotes (RFQs).
2. Shrinking operational cost – AI can, through cutting manual processes, among other ways, help reduce operational costs. Higher costs that AI deployed tools help save, propels better performance, and eventually succeed.
3. ROI – AI can construct a better road to travel and reach the expected Return on Investment (ROI). AI initiatives towards increased ROI are extraordinary measures of its success and its capacity to scale.

The possible roadmap to AI’s evolution

AI can help companies scale and innovate, but how can we possibly reach the destination is still a matter of concern?

Earlier, the business strategy was simple: Look through labour costs and find the rates that best fit manual, repetitive and process-driven tasks.

But now, companies look for digitised solutions, and in case they can afford them, they choose to hire robots. Ultimately, the fundamentals of an organisation’s operational process are up for some serious change.

This is how the traditional or legacy structures of work are shattered.

Another possible obstacle in the journey of financial industry evolution is job opportunity. Job opportunities are likely affected by AI’s wide-scale adoption, and existing efficiencies might be up for a review.

Also read: 5 Ways In Which AI Is Revolutionising The Lending Business In India

If you think this is all, we urge you to think again. The entire shift in customer experience and job possibilities would also have a major impact on real estate.

People whose job replacement is not on the books will be able to achieve more and get more things done with the same amount of workload.

Beyond this, the layout of the journey is much more than job replacement. It is also so much more about rightly utilising AI and supporting tools. The risks of AI are potentially high given the size of the organisation and its understanding of AI capability.

Any roadblocks on the journey of expansion?

Yes, the cost is the major roadblock organisations can experience while trying to venture into AI. Insufficient infrastructure and poor data quality are the significant areas of worry.

Companies with larger income pools have an advantage over others. For instance, they can enjoy the potential of AI sooner than their smaller counterparts which may entail growing beyond a threshold that others can reach.

Also read: How Will Machine Learning Transform Credit Underwriting Software?

Organisations are aiming to spike up their investments in technologies like AI that have the potential of revisiting how legacy firms work. However, it is not about redefining how the finance industry works but rather letting the foundations stay intact and trying to build better pillars to business success.

If you love the requisites of the fintech industry as much as we do, follow up with the blog section of Finezza. We keep posting the latest updates from the world of finance so that you’re always a notch ahead.