Artificial intelligence could revolutionize financial technology

With the advent of financial technology (fintech), companies are expected to offer more financial services to personalize their customer journey, enhance the overall user experience and generate alternative revenue streams.

Provenir, an AI-powered decision-making platform, believes that integrating business start-ups with artificial intelligence (AI) and efficient data management can lead to a “fintech revolution” that will transform industries in the country.

This is true with the growth of the domestic fintech market, which saw a massive 224 percent valuation increase from $3.4 billion to $11 billion in 2016 to 2021, indicating that Filipinos use at least one fintech service every second.

As restrictions on movement amid the ensuing pandemic continually lead to strong demand for digital services, companies need to “adapt themselves very quickly,” according to Provenir’s general manager for Asia Pacific Bharat Vellore.

“Artificial intelligence in financial technology opens the doors to digitize credit-rich sectors and diversifies products and capabilities. Flexibility and speed in customization play an important role in delivering personalized offerings to customers, which helps in hyper-growth,” he said during a recent forum.

Smart tools like AI can translate large amounts of data into valuable insights such as consumer patterns that help detect fraud and make business risk decisions.

“Artificial intelligence also helps organizations discover new patterns in data that enable them to serve a much broader base of people,” Velor said, adding that it can also reduce transaction costs, improve data management, and increase employee productivity.

Through artificial intelligence, patterns can be identified in a wide range of alternative, conventional, linear and nonlinear data. Also, it can enable high-resolution decision-making even for consumers who are considered “thin coils” or those without coils.

This promotes financial inclusion as fintech companies and financial service providers can support the unbanked, who represent more than 70 percent of the population in Southeast Asia and about 47 percent of adult Filipinos.

“AI can create alternative credit scores for the consumer loan space,” GM said, noting that it could replace the traditional FICO score that banks use to assess consumer risk and legacy underwriting, which are slow-moving processes in lending transactions.

Looking at the rise of fintech solutions that cater to different users, 77 percent of financial institutions have put innovation as their focus to enhance customer retention. These days, AI is evident in mobile app features such as setting up “frictionless” customers via face detection.

But this technology goes beyond superficiality. AI can reveal complex and unexpected variables that cannot be derived by manual analysis alone. It can “advise managers on how to use the information to increase profits.”

“Through artificial intelligence, e-wallet is no longer just a channel for paying bills, it is now also a bank, containing your investment portfolio, insurance, and much more. A great app,” Velor said.

The Philippines has continually moved into a strong AI hub in Southeast Asia as the country takes advantage of this technology to enhance regional and global cooperation of local businesses.

At the forefront of this is the Department of Trade and Industry, which launched a national roadmap for artificial intelligence last year, making the Philippines one of the first 50 countries in the world to do so.

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