Market Trends of AI in Fintech Industry
Fraud Detection is Expected to Witness Significant Growth
- Artificial intelligence can assist in identifying rapid and effective ways to detect financial fraud and malpractice. They allow machines to process enormous datasets accurately, which people sometimes struggle with. Using artificial intelligence for fraud detection has various advantages. The ability to compute quickly is a well-known benefit of AI and machine learning. It creates a grasp of a user's app usage habits, such as transaction methods, payments, and so on, allowing it to spot anomalies in real-time. It reduces false positives and allows specialists to focus on more complex issues because it is more efficient than manual techniques.
- According to a new poll conducted by Certified Fraud Examiners (ACFE) and analytics pioneer SAS, the use of Artificial Intelligence (AI) and Machine Learning (ML) for fraud detection increased internationally last year. According to the poll, 13% of organizations employ artificial intelligence (AI) and machine learning to detect and deter fraud, with another 25% planning to do so in the next year or two, representing roughly 200% growth. According to the poll, fraud examiners identified this and other anti-fraud tech developments in a cross-industry that are extensively spreading.
- Further, the Reserve Bank of India (RBI) reported around 9,103 bank fraud incidents across India in fiscal year 2022. This increased over the previous year, reversing the last decade's trend. The total value of bank scams fell from INR 1.38 trillion to INR 604 billion. Such high rise in the bank fraud cases would allow the AI market players to develop new solutions or tools to cater wide range of needs of the customer.
- The players in the market are collobarting to provide better service to its customer. For instance, in february 2023, Mastercard partnered with Network International, the Middle East and Africa's premier provider of digital commerce, to address fraud, declines, and chargebacks to minimise costs and risk for acquirers. Through the collaboration, Network will roll out Mastercard's Brighterion Artificial Intelligence (AI) technology across the region, providing acquirers and businesses with transaction fraud screening and merchant monitoring.
- Further, in March 2022, Shift Technology, a provider of AI-driven decision automation and optimisation solutions for the global insurance industry, and Duck Creek Technologies, a global provider of technology solutions to the P&C insurance industry, have announced a solution partnership to bring AI-enabled fraud detection capabilities to market in 2022. Once fully integrated, Duck Creek Claims users will receive real-time fraud alerts directly into their claims management software system.
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North America Accounts For the Largest Market Share
- North America is expected to dominate the AI in Fintech market due to prominent AI software and systems suppliers, combined investment by financial institutions into AI projects, and the adoption of most AI in Fintech solutions. The region is expected to experience significant growth in this area in the coming years. Additionally, North America serves as the business hub for many AI Fintech firms, with companies like Sidetrade choosing to locate their North American operations in Calgary.
- Government initiatives and investments towards AI. would drive the market for instance. In fiscal year 2022, the U.S. government spent USD 3.3 billion on artificial intelligence (A.I.) contracts, according to data from a recent Stanford University study. Spending by federal government agencies on technology climbed by over USD 600 million annually, from USD 2.7 billion in 2021, with the decision science, computer vision, and autonomous segments receiving the majority of investment. Since 2017, when the U.S. government spent USD 1.3 billion on artificial technology, total spending on A.I. contracts has climbed by over 2.5 times.
- The players in the market are collobarting to provide better service to the customer in the region. For instance, in august 2022, Zest AI, the recipient of NACUSO's CUSO of the Year Award and a player in improving credit access through better scoring announced a partnership with Equifax, Inc., a worldwide data, analytics, and technology firm. The collaboration will allow credit unions that use Zest AI's underwriting technology to analyze more of the data sourced by Equifax to accept more applications with better speed, particularly those who have traditionally been underbanked. This is Zest AI's first big distribution relationship with a National Consumer Reporting Agency.
- Some companies' solutions help businesses grow retail banking with next-best-action software, detect and combat financial fraud, and improve client relationships with multichannel customer experience solutions. For insatnce, in April 2022, Versapay, a player in Collaborative Accounts Receivable, said today that it has finalised its acquisition of DadeSystems, a fintech startup based in the United States. Versapay's array of accounts receivable (AR) automation solutions has been expanded, as have its AI and machine learning capabilities, as a result of the acquisition. It also broadens Versapay's enterprise and mid-market footprint while adding critical skills to its growing staff.
- Banks in the region have started using blockchain technology to record data and combat fraud. Blockchain records the details of each transaction, making it easier to detect hacker attempts This technology permits worldwide payments and allows for speedy transactions with low commissions. The Distributed Ledger Technology (DLT) of Blockchain assists in the recording and sharing data across different stores and a distributed network. Furthermore, cryptographic and algorithmic methods synchronize data across the financial network. This is a significant step since transaction data can be stored in different locations. It paves the way for blockchain interoperability and cross-industry data exchange.
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