In April 2016, Singapore-headquartered DBS Bank Ltd launched a banking app in India with in-built artificial intelligence (AI). In the past few months, many large banks such as ICICI Bank Ltd and HDFC Bank Ltd have also been looking at introducing AI technology in various services, including retail banking. Many of these are in the pilot or testing phases. The financial technology (fintech) space in India, too, has geared up towards AI and has seen interest from investors. For instance, Ratan Tata, chairman emeritus, Tata Sons Ltd, invested an undisclosed amount in Niki.ai, run by Techbins Solutions Pvt. Ltd, a start-up that offers chatbots to perform transactions. A chatbot is a computer programme that can conduct conversations. Niki.ai is an AI-fueled smart-purchasing assistant company.
According to a paper by Stanford University’s John McCarthy, one of the founders of AI, it is the science and engineering of making intelligent machines, especially intelligent computer programmes. Simply put, AI is a technology of making machines over time learn from actions and take decisions for you. The machine is able to do the job of a human without any manual intervention. “The field of AI is changing fast. Advanced machine learning algorithms are composed of many technologies (such as deep learning, neural networks and natural-language processing) used in unsupervised and supervised learning that is operated guided by lessons from existing information. Machine learning is only one of the many AI technologies. Others include robotics, knowledge discovery, natural language processing and advanced vision,” said Rajiv Anand, executive director (retail banking), Axis Bank.
Though AI has been around for a while, adoption in financial services is taking place now. “This is evolution of the digital story. Processes have got automative and AI can be used in places where you have to take a decision and recommend products. Banks have also started rolling out pilots. The concept of AI is not new. For instance, 10-15 years ago it was used in logistics. The starting point for AI is an algorithm where it looks at human judgement and then learns from experience,” said Vivek Belgavi, partner, financial services–fintech and technology consulting leader, PwC India.
What is prompting AI usage in financial services? “The current digital wave in banking, fintech’s approach to low-cost products, and the open source system and accessibility is bringing AI to the forefront,” said Belgavi. AI can be used for basic processes and to build scale. “Right now, AI is available in a simplistic way. It promises scale and can do a basic element of interaction,” said Nitin Chugh, country head, digital banking, HDFC Bank.
How is AI used?
It is early days for AI in financial services in India. “In BFSI (banking, financial services and insurance), they have not adopted this technology (yet). These are still early days,” said Mallinath Sengupta, chief executive officer, NextAngles, which uses AI to help banks in compliance monitoring. As of today, globally, financial services are looking to use AI for compliance, anti-money laundering and risk management. “We are focusing on regulatory compliance, anti-money laundering and liquidity risk. For instance, you can’t sell derivatives to senior citizens because they are conservative. The machine will be able to tell which product can be sold and to whom,” said Sengupta.
AI can be used extensively in customer service. “For instance, many European airports are using virtual customer assistance at airport gates,” said Sengupta. In this, 3D holographic images of persons in uniform aid passengers passing through security, and the UK border and international arrival gates.
Fintech companies are also developing apps.