ARTIFICIAL

INTELLIGENCE
IN
FINANCIAL
SECTOR

Shantanu Krishna
 CONTENT & FLOW OF PRESENTATION

UAE
Overview- Changing
Exchange- AI Are you AI
Remittance Market
Areas of applications Ready?
Industry Landscape
Operations
Overview- Remittance Industry
 • For the first time in recent history, remittance flows to developing countries
registered a decline for two successive years.
REMITTANCE
INDUSTRY • Remittances declined by an estimated 2.4 percent, to $429 billion, in 2016,
after a decline of 1 percent in 2015.

• Low Oil prices & weak economic growth in Russia & GCC countries –main
reasons of lower remittance flow.

Going through a
Transitionary Phase…
Remittance flow to
developing countries
on a decline in the
last 2 years
 • Structural constraints like De-Risking* raising regulatory burdens on money
transfer operators
REMITTANCE
INDUSTRY • Labor market “Nationalization” policies in the GCC & Anti immigration
sentiments have dampened remittance flows, especially through formal
channels.

• Imposition of Service Tax of 12.36% by Govt. of India, on remitting money

is passed on directly to consumers making it difficult for the businesses to
Going through a maintain competitiveness.
Transitionary Phase…
• Despite this, UAE
has the lowest
Increased Cost of remittance fee of
2.5%
remittances adding to
the problem

*International correspondent banks close the bank accounts of money transfer operators, to avoid the risks of money laundering and financial crime
 Changing Market Landscape

Rising remittance costs coupled with rapid technological innovation

has made the market more competitive than ever!

Let’s understand this changing Market Landscape!

 1. Emerging Social Media Platforms for Money Transfer Services

CHANGING MARKET Facebook has currently around 50 different regulatory

LANDSCAPE licences in the US alone that will allow FB users to
transfer money via their messenger app.

Disruptive Innovations in
Financial Services
Social Media
encircling Money
Transfer services!
It has become one of the most common tools to transfer
money. Last Chinese New Year, they processed more
than 8 billion red envelope transactions
Alibaba’s firm launched a money market fund that has
become the 3rd biggest money market fund in the world,
dislodging incumbents who have been doing this for
decades.

*Source: World Bank, April 2017

 2. Digital becoming mainstream

• Using the existing card infrastructure, creation of new cards based

CHANGING MARKET products ( dual cards) through which migrants families can
LANDSCAPE withdraw remittances through ATMs

• Proliferation of smartphones that make online transfers more

convenient & cheaper

Disruptive Innovations in 3. Future Financial platforms will not be traditional banks but will be
technological firms
Financial Services
• Peer to peer lending platforms now offer consumers an
P2P Lending alternative to loans that used to be previously available mainly at
banks
platforms & Digital
media growth • Robo advisory platforms offer consumers asset management
solutions that are not only more transparent than what they charge
but also substantially cheaper.

*Source: World Bank, April 2017

 4. FIN-TECH (Financial Technology) in key sectors

It is the innovative use of technology in the design & delivery of

CHANGING MARKET financial services to replace the old or enhance the usage of these
LANDSCAPE services in the existing financial companies.

Disruptive Innovations in
Financial Services
Rise of
Fintech

*Source: PWC global Fintech Survey, 2016

 Fintech is an umbrella that covers a number of categories of IT
innovations applied in the financial sector, such as:

CHANGING MARKET
LANDSCAPE
Algorithm
Big
based
Data
Stock Trading
Financial
Trading
Education
Disruptive Innovations in Apps
Financial Services Crypto Peer to Peer
Currency Lending
Rise of Robo Artificial
Advisors Intelligence
Fintech Personal
Block
Finance
Chain
Tools
Crowd
Funding
 Focus on
Artificial Intelligence
 AI is a field in computer science that focuses on simulating the intelligence
of humans into artificial machines with the help of sophisticated machine
Artificial learning and natural language processing algorithms.
Intelligence
MAJOR BRANCHES OF AI- REPLICATING ABILITY TO THINK, ACT & LEARN

“Machine intelligence is the last

invention that humanity will ever
need to make”

Nick Bostrom

*Source: AI Magazine, Vol. 27, Number 3

 AI is a field in computer science that focuses on simulating the intelligence
of humans into artificial machines with the help of sophisticated machine
Artificial learning and natural language processing algorithms.
Intelligence
MAJOR BRANCHES OF AI
1. Machine Learning: Machine learning is the
process of automatically discovering patterns in
data. Once discovered, the pattern can be used
to make predictions. Important algorithms:
1. Regression Based Algorithms
2. ANN ( Artificial Neural Networks)
3. Fuzzy Logics
4. KNN
5. Bayesian Networks
“Machine intelligence is the last
invention that humanity will ever
need to make”
2. Autonomics: Refers to the systems that are
Nick Bostrom designed to perform routine tasks and
operations performed by humans. They are
programs that ‘observe’ the way a trained user
takes decisions or resolve issues and replicate
the same decision making process in future
events.
 AI is a field in computer science that focuses on simulating the intelligence
of humans into artificial machines with the help of sophisticated machine
Artificial learning and natural language processing algorithms.
Intelligence
MAJOR BRANCHES OF AI

3. Machine vision: Refers to the ability of

computers to identify objects, scenes and
activities in images. Computer vision technology
uses sequences of image processing operations
that breaks down images to manageable pieces.
E.g. Face recognition softwares used by FB.

“Machine intelligence is the last

invention that humanity will ever
need to make”

Nick Bostrom
4. NLP: Ability of a computer to interpret human
language and take appropriate action. Most well
known application is Siri for the iPhone.
AI Application
 Avoid AML* Practices by having a more efficient KYC System
This is done to avoid false positives & false negatives by using AI & ML Algorithms

Learning: Reasoning: Self-correction:

learning from data on the ability to draw Improving future
which a model is conclusions outcomes based on
developed & rules are
feedback to past reasoning
created

Important AI/ML Techniques

Artificial
• Machine Learning: Machine learning provides computers the ability to
Intelligence learn and change without being explicitly programmed.

• Collaborative Filtering: Capable of finding transactions with missing,

Application matching and/or odd information.
in Money
• Feature Matching: Utilized to identify transactions below a specific
Transfer Services monetary threshold

• Fuzzy Logic: Used to find data matches with slight changes to names or
addresses

*AML stands for Anti Money Laundering Practices

 Avoid AML* Practices by having a more efficient KYC System
Essential features of AI Solutions & Potential Applications in KYC-AML

Artificial
Intelligence

Application
in Money
Transfer Services

*AML stands for Anti Money Laundering Practices Source: Celent

 Check the rising cost of Customer Servicing through Chat-Bots!
Bots are simple artificial intelligence systems that you interact with via text.

“Chatbots also have the potential to help businesses significantly cut labor costs.
While complete automation of the customer service workforce is not feasible,
automating customer management and sales positions where possible through
Chatbots and other automation technologies would result in considerable
savings.” (The Chatbot Explainer, BI Intelligence, July 2016)

Artificial
Intelligence

Application
in Money
Transfer Services

This could help in better utilization of funds & resources & reduction in the
cost it takes to hire & train new agents in situations of high attrition!
 Predicting Foreign Exchange prices for better money management
This could be important to minimize risks/ adjust costings to maximize returns

Artificial
Intelligence

Application Using NLP & Text Mining/Sentiment Analysis techniques, Currency Market
in Foreign Exchange Predictions are possible by analyzing written text sentiments of people on
Twitter & other social platforms.
Services
This could be important to make important business decisions including
anticipating money transfer requests & manpower requirement/ Cost
estimation &
 Robo Advisors to give wealth management tips to your clients!
Personalized port-folio decisions taking into account client’s historical
investment decisions, Market reports, Risk profile & other factors

What & How do they do?

Scouring ❶ ❷ Profiling info. to

articles, stock figure out the best
ratings, reports investment
Artificial by AI Bots to
Scouring
Big data Knowing decisions
collect data
Intelligence from
different
what to
invest in?
sources
Application
in Wealth Preparing
Market
for
Management Services Predictions
investment AI chatbots
Market Can help client
predictions answer all possible
considering all questions before
possible factors ❹ ❸ investment
 AI Bots built with NLP & ML algorithms are making it easy to make
bill payments with/without internet

This allows users to make direct p2p payments without leaving

your preferred app or platform. For instance, you can simply
type “/PayPal send $5 to @Tom” within Slack to pay him back
for that morning cup of coffee.

Artificial
Intelligence Companies like Hipmunk are using Messenger to book and pay
for hotels with the linked card on Facebook directly within
Messenger, which streamlines their entire booking process.
Application
in Utility Bill
Payments Mypoolin offers chatbot that allows you to send or receive
payments via text messaging. All users have to do is input a
command like ‘transfer [amount] [phone number]’ and once the
payment is processed the recipient receives the money instantly.
 Why superior Customer Experience is so important?

Rising awareness in Greater Consumer Eroding

substitutes available Choice Loyalty

Customer Experience
Artificial
Stream Lining Personalization Image & Pattern Robotic Process
Intelligence Processes of Marketing recognition Automation

Application Natural
Marketing
NLP for Real Time
Language Customer Tailored
for superior Interfaces
Automation
Satisfaction Communication
CX Predicting Improve
Recommenda-
Customer Churn Customer Loyalty
tion Systems & Retention
& Segmentation

How is AI changing Customer Experience?

*CX stands for Customer Experience
 Stream Lining Contact centers improve customer interactions by using
Processes Chatbots to provide quick resolutions to their problems,
there by reducing over head costs without impacting
customer service

Businesses are increasingly taking advantage of this desire for

personalization by employing AI to analyze their customers’
Personalization
habits and interests and offering them sales, marketing and
other content that entices them to make a purchase

Artificial Robotic Process RPA is the application of a computer software or

“robot” to process transactions, manipulate data or
Automation
Intelligence trigger responses, depending on the scope of the
request.

Application Leveraging algorithms like Naïve Bayes & Neural Networks, Recommendation
we can analyze history of product purchases (Financial) and Systems
for superior present personalized content recommendations.

CX
Natural Language Speech recognition technology has come a long way
Few Examples Interfaces with advances in natural language understanding. This
enables customers to speak to an Interactive Voice
Response (IVR) system in a natural way.

*CX stands for Customer Experience

 Implement the following before thinking about AI

Integrated data Identify Starting

Focus on Clean data: Point
warehousing:
ML algorithms require Think about deploying
clean data to learn from Connect data from
different silos AI strategically

4 Different ways to deploy AI in your Organization!

Artificial Automated Assisted Augmented Autonomous
Intelligence Intelligence Intelligence intelligence
Intelligence
• Improves • Helps people • Helps people • Automates
human perform tasks make better decision-
Is Your Organization productivity by faster and decisions by making
automating better (e.g., analyzing past processes
ready for AI? manual tasks medical image behavior (e.g., without human
(e.g., software classification, media intervention
that compares real-time curation, while also
documents and operational guided putting
spots efficiency personal controls into
inconsistencies improvement). budgeting, on- place
and errors). the-fly decision
analysis).
Thank You!