AI in Fintech Market Overview
The market for AI in Fintech is forecast to reach $11.2 billion by 2026, growing at a CAGR of 29.75% from 2021 to 2026. Artificial Intelligence (AI) has taken the tech world by storm, allowing companies to automate their high value and complicated processes. The reason to make a shift towards machine learning is also motivated by reduction in cost, increasing efficiency, reducing error and better customer experience. The AI in fintech is majorly driven by credit card fraud detection. With the help of Generative Adversarial Network, AI can spot the difference between real data and hacked data in each transaction and send alert to banks. The biggest challenge with AI is the sensitive issue of data privacy and security, which most fintech companies are facing. The fintech sector is governed by strict compliance to regulations and governance since any data breach or security failure could be disastrous.
The report: “AI in Fintech Market – Forecast (2021-2026)”, by IndustryARC covers an in-depth analysis of the following segments of the AI in Fintech Market.
By Type – Solutions, Services.
By Deployment – Cloud
, On Premises.
By Application –
Credit Scoring, Personal Assistants, Compliance & Fraud Detection, Debt Collection, Virtual Assistant
, Asset Management, Insurance, Debt Collection, Virtual Assistant, Sentiment Analysis, Predictive Analytics, Business Analytics & Reporting, Customer Behavioral Analytics.
By End Use Industry – Retail Banking, Investment Banking, Hedge Funds, Stock Trading Firms and Others.
By Geography - North America (U.S, Canada, Mexico), South America(Brazil, Argentina and others), Europe (Germany, UK, France, Italy, Spain, Russia and Others), APAC(China, Japan India, SK, Aus and Others), and RoW (Middle east and Africa).
- Advent of technology is bringing up a new breakthrough every now and then and AI has certainly changed the way of data collection, data integration, analysis and deployment.
- As far as financial technology is concerned, the trend of these “robo-advisors” has brought in a drastic improvement in customer interaction and customized revenues.
- Systems such as chatbots, voice systems, and text chats are designed to replace the human intervention while being cost efficient. They are even intended to recognize and prevent fraud attempts. On the other hand, automated financial assistants and planners became handy in monitoring events and help customers in making financial decisions.
AI in Fintech Market Segment Analysis - By Deployment
On Premises has dominated the AI in Fintech Market as compared to the other deployment. Cloud deployment model however is going to be witness significant growth during the forecast period. Artificial intelligence is still in its progressive stage and its influence may be more significant in the near future. With the adoption of AI in finance sector, various startups are giving tough competition to giant players. An impressive growth is expected in the fintech industry with the development in other technologies, such as blockchain and cybersecurity along with AI. Some big companies such as Google and IBM have started building their own blockchain. The major technological advancement has been driven by increased focus on cloud services which has further raised the demand for cloud deployment of AI technology solutions.
AI in Fintech Market Segment Analysis - By Applications
AI can be used to find the relation between world events and their impact on prices by using predictive analysis. This information is very useful for any kind of wealth investment. AI in financial services are used to protect the details of their customer. AI is playing major role by quickly assessing the large algorithms to protect from fraudulent cases. AI is used to advise the accurate result. P2P organization analyze their potential customer’s behavior and detect all the risk in the cooperation with that particular customer.AI also helps in analyses consumer’s details who doesn’t have past credit history or his credit history is destroyed. This growing list of applications will be the major driver of adoption of AI in Fintech sector.
AI in Fintech Market Segment Analysis - By Geography
North America region holds the largest market share in the Artificial Intelligence in Fintech Market at 44%. However, Asia Pacific witnesses highest growth during the forecast period. North American Artificial Intelligence in Fintech Market is mainly driven by the large number of startups and emerged companies offering AI services to financial services. The key applications include Virtual Assistant, Business Analytics & Reporting, Customer Behavioral Analytics among others.
AI in Fintech Market Drivers
Focus of Companies on Cost Reduction and Improving Efficiency
Artificial Intelligence in fintech is allowing companies to cut down their cost, automate their process and reduce the chances of error. AI Chatbots are used by companies as customer assistants for various purposes such as sales, customer care executive (over phone), and online chat executive. AI is empowering small finance companies as it is affordable as well as chances of error occurrence is very low. In addition, the insightful details about the cash flow and income and expense is gaining the traction from the end user as this helps companies to reduce their expenses.
New Technological Advancements drives Adoption of AI in Fintech
According to McAfee cybercrime currently costs the global economy around $600 billion, or 0.8% of global GDP. One of the biggest cybercrimes is credit card fraud. Thus companies are designing a new generation of algorithms that are Convolutional Neural Networks and are based on the visual cortex, which is a small segment of cells that are sensitive to specific regions of the visual field in the human body. This means that they are able to extract elementary visual features like oriented edges, end-points and corners. This technology can study the spending data of an individual and be able to determine, based on this information, whether they performed the most recent transaction on their credit card or if someone else was using their credit card data.
Another application driven by new technology developments has been robo advisors. Robo-advisor keep monitoring on the events, stocks, bond and price trend according to user’s requirement which help them in making suggestion regarding which stock needs to be sell or buy. They play very important role in risk management, speech recognition, network security access to big data etc. These technology developments will create new avenues of opportunity for AI in Fintech thereby driving the market growth.
AI in Fintech Market Challenges
Concerns Regarding Data Privacy
The biggest challenge with AI is the sensitive issue of data privacy and security, which most fintech companies are facing. The fintech sector is governed by strict compliance to regulations and governance since any data breach or security failure could be disastrous. Privacy concerns are cropping up as companies feed more and more consumer and vendor data into advanced, AI-fuelled algorithms to create new bits of sensitive information, unbeknownst to affected consumers and employees. This is especially prevalent in the retail banking sector, where consumer data collection has been at the forefront in terms of big data challenges. These data privacy concerns will hinder the adoption of AI especially in banking sector.
Product launches, acquisitions, and R&D activities are key strategies adopted by players in the AI in Fintech Market. Microsoft, Google, IBM, Intel, Affirm, Upstart, Sigmoidal, Zest Finance and Amazon are considered to be the key players of the Artificial Intelligence in Fintech Market.
- In 2017, IBM has acquired three companies namely Agile 3 solutions(USA), XCC(Germany), and Vivant Digital (Australia) thus showcasing its focus to expand its AI in fintech sector.
- Yukka Labs (Fintech startup) has launched a new product named Yukka news and trends which enables traders and investors organize efficient way to view real time finance news and gain critical market insights. Kavout is AI driven investment platform for investors of all level to give them clear insight to make smart investment.
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