AI and Analytics in BFSI

Industry

Prof.Akshay Rele
FinTech: Introduction

 Financial technology (better known as fintech) is used

to describe new technology that seeks to improve
and automate the delivery and use of financial
services.
 Fintech is utilized to help companies, business
owners, and consumers better manage their financial
operations, processes, and lives.
 FinTech is composed of specialized software and
algorithms that are used on computers and
smartphones.
 Fintech refers to the integration of technology
into offerings by financial services companies to
improve their use and delivery to consumers.
 Companies in the finance industry that use
Fintech have expanded financial inclusion and
use technology to cut down on operational
costs.
 Examples of fintech applications include robo-
advisors, payment apps, peer-to-peer (P2P)
lending apps, investment apps, and crypto apps,
among others.
Fintech: Examples

 Robo-advisors
 Investment apps
 Payment apps
 Personal finance apps
 Peer-to-peer (P2P) lending
 Crypto apps
 Insurtech
 AI driven factors for Enhancing
Business Outcomes

 Predictive analytics
 Fraud detection
 Chatbots and virtual assistants
 Risk management
 Automated underwriting
 Personalized financial advice
 Algorithmic trading
 Customer segmentation
 Credit scoring
 Natural language processing
 Robotic process automation
 Image recognition
 Machine learning
Figure 1: Potential for AI
Adoption in BFSI
 Use cases
 Making Investment Predictions: The fact that Machine learning
enabled technologies give advanced market insights allows the fund
managers to identify specific market changes much earlier as
compared to the traditional investment models. ML technologies to
develop automated investment advisors, the disruption in the
investment banking industry is quite evident.

 Secure Transactions: AI/Machine Learning based algorithms are

excellent at detecting transactional frauds by analyzing millions of
data sets that may be missed by naked eye. These models are
generally built on the client’s behavior on the internet and transaction
history.

 Risk Management: Using machine learning techniques, banks and

financial institutions can significantly lower the risk levels by analyzing
a massive volume of data sources. Unlike the traditional methods
which are usually limited to essential information such as credit score,
ML can analyze significant volumes of personal information to reduce
their risk.
 Customer Data Management: Integrating machine
learning techniques to manage such large volumes of
data can bring both process efficiency and the benefit of
extracting real intelligence from data. AI and ML tools
such as data analytics, data mining, and natural
language processing, help to get valuable insights from
data for better business profitability.
 Process Automation: Machine Learning powered
solutions allow finance companies to completely replace
manual work by automating repetitive tasks through
intelligent process automation for enhanced business
productivity. Machine Learning technology can easily
access the data, interpret behaviors, follow and
recognize the patterns.
AI powered Financial
Services
 Wells Fargo worked with Kasisto to develop its first customer service
chatbot.
 Kasisto claims its chatbot platform KAI could help banks create
chatbots that could:
 Allow customers to ask questions, make payments, and review
account balances and details.
 Provide customers with information about the status of their loan
applications.
 Fulfill certain requests directly within the conversational interface. such
as sending and scheduling payments.

 https://youtu.be/m-nbznORjaY

 https://youtu.be/KbToD8L1qnQ
 Personalized Financial Services (Robo Advisory)
1. Assisting users in their financial decisions
2. New Management decision-making
3. Reducing fraud and fighting crime
Robo-Advisor
 A robo-advisor is a digital financial advisor that
provides financial advice or manages investments
with moderate to minimal human intervention.
 Robo-advisors are designed to deliver advice digitally
based on inputs received from the investor.
 Robo-advisors are services that automatically balance
an investor's portfolio.
 They make decisions based on your basic information
and investing goals.
 Ex: Arthayantra, Fundsindia, Bigdecisions
Feedzai
 Feedzai is the world’s first RiskOps platform for financial risk
management, and market leader in safeguarding global
commerce with today’s most advanced cloud-based risk
management platform, powered by machine learning
and artificial intelligence.

 https://youtu.be/PWw3-kPIObI

 Feedzai is securing the transition to a cashless world while

enabling digital trust in every transaction and payment
type.
 The world’s largest banks, processors, and retailers trust
Feedzai to protect trillions of dollars and manage risk
while improving the customer experience for everyday
users, without compromising privacy.
JP Morgan’s - COIN
 JP Morgan started implementing a program called
COIN, which is short for Contract Intelligence. COIN
runs on a machine learning system that's powered by
a new private cloud network that the bank uses.
 Apart from shortening the time it takes to review
documents, COIN has also managed to help JP
Morgan decrease its number of loan-servicing
mistakes.
 According to the program's designers, these mistakes
stemmed from human error in interpreting 12,000 new
wholesale contracts every year.
 COIN is part of the bank's push to automate filing tasks
and create new tools for both its bankers and clients.
AI and Analytics in
Insurance
 Case study of Lemonade.
https://youtu.be/R5hX1-eTyro

 Use of Maya and Jim

https://youtu.be/5EEJf-hXq0I
Automated and Augmented
Underwriting
 Automated underwriting is a technology-
driven underwriting process that provides a computer
generated loan decision. The lending industry is
broadly migrating to the use of new technology-driven
loan underwriting platforms to improve the processing
time for all types of loans.
 Underwriting is the process of evaluating the risk
involved with a financial transaction, such as a bond
issue, bank loan, or insurance policy.
 Automated underwriting uses algorithms instead of
human beings to make underwriting decisions that are
quicker and less prone to errors.