ARTIFICIAL
INTELLIGENCE
IN
FINANCIAL
SECTOR
Shantanu Krishna
CONTENT & FLOW OF PRESENTATION
OverviewRemittance
Industry
Changing
Market
Landscape
UAE
ExchangeAreas of
Operations
AI
applications
Are you AI
Ready?
Overview- Remittance Industry
REMITTANCE
INDUSTRY
• For the first time in recent history, remittance flows to developing countries
registered a decline for two successive years.
• 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
REMITTANCE
INDUSTRY
Going through a
Transitionary Phase…
Increased Cost of
remittances adding to
the problem
• Structural constraints like De-Risking* raising regulatory burdens on money
transfer operators
• 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
maintain competitiveness.
• Despite this, UAE
has the lowest
remittance fee of
2.5%
*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.
CHANGING MARKET
LANDSCAPE
Disruptive Innovations in
Financial Services
Social Media
encircling Money
Transfer services!
*Source: World Bank, April 2017
Emerging Social Media Platforms for Money Transfer Services
Facebook has currently around 50 different regulatory
licences in the US alone that will allow FB users to
transfer money via their messenger app.
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.
2.
CHANGING MARKET
LANDSCAPE
Digital becoming mainstream
• Using the existing card infrastructure, creation of new cards based
products ( dual cards) through which migrants families can
withdraw remittances through ATMs
• Proliferation of smartphones that make online transfers more
convenient & cheaper
Disruptive Innovations in
Financial Services
P2P Lending
platforms & Digital
media growth
*Source: World Bank, April 2017
3.
Future Financial platforms will not be traditional banks but will be
technological firms
• Peer to peer lending platforms now offer consumers an
alternative to loans that used to be previously available mainly at
banks
• Robo advisory platforms offer consumers asset management
solutions that are not only more transparent than what they charge
but also substantially cheaper.
4.
CHANGING MARKET
LANDSCAPE
Disruptive Innovations in
Financial Services
Rise of
Fintech
*Source: PWC global Fintech Survey, 2016
FIN-TECH (Financial Technology) in key sectors
It is the innovative use of technology in the design & delivery of
financial services to replace the old or enhance the usage of these
services in the existing financial companies.
Fintech is an umbrella that covers a number of categories of IT
innovations applied in the financial sector, such as:
CHANGING MARKET
LANDSCAPE
Big
Data
Disruptive Innovations in
Financial Services
Rise of
Fintech
Financial
Education
Stock
Trading
Apps
Crypto
Currency
Algorithm
based
Trading
Peer to Peer
Lending
Artificial
Intelligence
Robo
Advisors
Block
Chain
Crowd
Funding
Personal
Finance
Tools
Focus on
Artificial Intelligence
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
learning and natural language processing algorithms.
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
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
learning and natural language processing algorithms.
MAJOR BRANCHES OF AI
“Machine intelligence is the last
invention that humanity will ever
need to make”
Nick Bostrom
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
2. Autonomics: Refers to the systems that are
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.
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
learning and natural language processing algorithms.
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:
learning from data on
which a model is
developed & rules are
created
Artificial
Intelligence
Application
in Money
Transfer Services
Reasoning:
Self-correction:
the ability to draw
conclusions
Improving future
outcomes based on
feedback to past reasoning
Important AI/ML Techniques
• Machine Learning: Machine learning provides computers the ability to
learn and change without being explicitly programmed.
• Collaborative Filtering: Capable of finding transactions with missing,
matching and/or odd information.
• Feature Matching: Utilized to identify transactions below a specific
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
in Foreign Exchange
Services
Using NLP & Text Mining/Sentiment Analysis techniques, Currency Market
Predictions are possible by analyzing written text sentiments of people on
Twitter & other social platforms.
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?
Artificial
Intelligence
Scouring
articles, stock
ratings, reports
by AI Bots to
collect data
Application
in Wealth
Management Services
Market
predictions
considering all
possible factors
❶
❷ Profiling info. to
Scouring
Big data
from
different
sources
Knowing
what to
invest in?
Market
Predictions
Preparing
for
investment
❹
figure out the best
investment
decisions
AI chatbots
Can help client
answer all possible
questions before
investment
❸
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
Application
in Utility Bill
Payments
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.
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
substitutes available
Greater Consumer
Choice
Eroding
Loyalty
Customer Experience
Artificial
Intelligence
Application
for superior
CX
Stream Lining
Processes
Personalization
of Marketing
Image & Pattern
recognition
Robotic Process
Automation
Natural
Language
Interfaces
Marketing
Automation
NLP for
Customer
Satisfaction
Real Time
Tailored
Communication
Recommendation Systems
Predicting
Customer Churn
& Segmentation
Improve
Customer Loyalty
& Retention
How is AI changing Customer Experience?
*CX stands for Customer Experience
Stream Lining
Processes
Contact centers improve customer interactions by using
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’
habits and interests and offering them sales, marketing and
other content that entices them to make a purchase
Artificial
Intelligence
Application
for superior
CX
Few Examples
*CX stands for Customer Experience
Robotic Process
Automation
RPA is the application of a computer software or
“robot” to process transactions, manipulate data or
trigger responses, depending on the scope of the
request.
Leveraging algorithms like Naïve Bayes & Neural Networks,
we can analyze history of product purchases (Financial) and
present personalized content recommendations.
Natural Language
Interfaces
Personalization
Recommendation
Systems
Speech recognition technology has come a long way
with advances in natural language understanding. This
enables customers to speak to an Interactive Voice
Response (IVR) system in a natural way.
Implement the following before thinking about AI
Focus on Clean data:
ML algorithms require
clean data to learn from
Integrated data
warehousing:
Identify Starting
Point
Connect data from
different silos
Think about deploying
AI strategically
4 Different ways to deploy AI in your Organization!
Artificial
Intelligence
Is Your Organization
ready for AI?
Automated
Intelligence
Assisted
Intelligence
Augmented
Intelligence
Autonomous
intelligence
• Improves
human
productivity by
automating
manual tasks
(e.g., software
that compares
documents and
spots
inconsistencies
and errors).
• Helps people
perform tasks
faster and
better (e.g.,
medical image
classification,
real-time
operational
efficiency
improvement).
• Helps people
make better
decisions by
analyzing past
behavior (e.g.,
media
curation,
guided
personal
budgeting, onthe-fly decision
analysis).
• Automates
decisionmaking
processes
without human
intervention
while also
putting
controls into
place
Thank You!