The inclusion of chatbots for enhancing customer engagement, rising digital disruptions across the globe, and improving risk management are the drivers of the artificial intelligence (AI) in banking, financial services, and insurance (BFSI) market.
Registering a 37.2% CAGR during the forecast period (2019-2024), the market is expected to reach $20,017.9 million by 2024, from $3,091.9 million in 2018. AI is the mimicking of human intelligence by machines, especially computer systems, to perform tasks, such as learning the information, reasoning to reach conclusions, and self-correction.
The use of AI to counter fraudulent activities is trending in the AI in BFSI market. As frauds are common and difficult to track in the BFSI industry, advanced data analytics is being deployed to improve compliance and keep track of transactions. The technology has enabled the use of digital payment advisers, AI bots, and biometric fraud-detection mechanism in achieving a wider customer base and higher quality service, and at the same time reducing operational costs and increasing market revenue. This way, it helps banks identify frauds and prevent money laundering.
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The inclusion of chatbots for engaging customers is driving the AI in BFSI market. Technical advancements have resulted in reduced personal contact with customers, which has raised the need for customer retention among many BFSI companies across the world. Banks are extensively using AI to build a customer-centric culture using machine learning, cognitive technologies, and natural language processing. For instance, the Bank of America developed a chatbot, Erica, in 2018, which is an AI-powered tool that helps clients by providing financial guidance via text and voice messages.
The AI in BFSI market is segmented by region, offering, end use, and technology. Based on offering, the bifurcations of the market are service and solution. Between the two, the major market share was acquired by solutions in 2018. This was due to the growing demand for personalized service, need for customer behavior analysis, and a shift toward digital banking. During the forecast period, the higher CAGR is expected to be exhibited by services due to the increasing requirement for training, support, and maintenance by retailers who are using AI.
The region segment of the AI in BFSI market is classified into Latin America, Europe, Middle East & Africa, Asia-Pacific (APAC), and North America. Due to the rising investments in the fintech industry and deployment of AI by major American banks, such as JPMorgan Chase & Company, Bank of America Corporation, and U.S. Bancorp, the largest revenue share was accounted for by North America in the historical period. In the forecast period, with rising digitization in the financial sector, the APAC region is expected to witness the fastest growth.
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The AI in BFSI market can grow with the usage of the computer vision technology to tackle the issue of false documents. This technology can be used to extract information, using imagery, for identification and further analysis of documents. Besides validating documents, the technology can also be used to monitor sensitive locations, such as an ATM chamber, in real time and generate prompt alerts if need be. Banks are deploying computer vision for various routine procedures, such as know-your-customer (KYC), face recognition for authentication, and automated check processing.
Hence, the market for AI in the BFSI industry is expected to witness significant growth in the forecast period due to the digitization of finance sector and the need to curb fraudulent activities.
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