Strategic AI in the Financial Services Industry
NMIMS University
MBA class : Year II : 2019

Acknowledgement
and Disclaimer
All the material in this deck is been prepared using resources published on public
domain by various subject matter experts, Technical and domain experts and visual
presentation experts. The deck is a collection of information published on
web/internet sites, blogs and informative portals and it is prepared purely for
educational awareness perspective with not for profit motive. I do not claim any copy
right or ownerships IP whatsoever for any of the slides.

End of an Era
1955 1956
Beginning of a new Era

Our day to day affair with AI

Just what is this Big
Data, AI and Machine
Learning ?
(Short Summary)

Born : 1997
Business : Entertainment (Internet Streaming)
Claim to fame : 100 Million Subscribers
in 50 countries, two billion hours of
TV shows/movies per month.
Personality : Customer Obsessed
Superpower : Data Analytics and AI

Netflix was at a crucial juncture after launching
online streaming services in 2013.
They desperately wanted a smash hit

Netflix spent $100 million based on a
prediction based on data analytics.
(& it was a Smash hit exactly as predicted !)
• Data generated from over 40 million “plays” a day.
• Record of every time subscriber’s pause the action, rewind, or fast-
forward.
• They track how many subscribers abandon a show entirely after
watching for a few minutes.
• In addition they track the time of day when shows are watched, and
on what devices they are watched on.
• Co-relation of this data with account data
• Verified personal information (sex, age, location)
• Preferences (viewing history, bookmarks, Facebook likes)
• Recommendation and repeat viewing habits
• Content creation using data analytics and AI – and more

The result
House of Cards is the most streamed piece of
content in the United States and 40 other
countries, according to Netflix.
It is rated 9.1/10 from 180,816 users at IMDB.

Becoming big data company first
(& happens to use this to entertain us)

1997 2011 2016
Chess
Garry Kasparov v/s IBM DeepBlue
Jeopardy
Brad & Ken v/s IBM Watson
Go
Lee Sedol v/s DeepMind

Deep Learning

Lets just watch this video…

Remember the world of Data

What data we are talking about
Date / Time
Temperature
Public news
Social Media
Mobile
Market Research
Campaign Trails
Emails
Location data
Chats
Sensors
Clicks
Video viewing/Streaming
Video viewing - Pauses in Videos
Images
Media
Video Uploads
SYSTEMs
Customer ID/Aadhar
Public Identity
Employee Identity
Social Identity
Marketing data
CRM
Campaign
Supply Chain
Procurement
HR System
Billing
Sales
Accounting
Inventory Mgmt
Workflow processing
Core Systems
Data Warehouses
Four V’s lead to
the Fifth V - Value

Evidence : Technology is Changing Business Faster than ever
89%
Of S&P 500 companies of 1955
Is GONE in 20141955 2014

Evidence : Technology is Changing Business Faster than ever
52%
Of S&P 500 companies of 2000
Is GONE in 20142001 2014

Evidence : Technology is Changing Business Faster than ever
2001 2014
52%
Of S&P 500 companies of 2001
Is GONE in 2014

Financial Services
17% of Global GDP

Imagine the difference here.
Is it the People, Backend Systems and Technology platforms,
Age, Market Segment or the DNA ?

Kodak’s
downfall
wasn’t about
Technology
Remember Kodak Moment ?

In 2019 Research, Deloitte discovered a pattern in a survey across several Financial Services firms
Frontrunner financial services firms are achieving revenue
growth of 19% directly attributable to their AI initiatives, much
greater than the 12% of followers achieve.
70% of all financial services firms participating in the study
are using machine learning in production environments
today, and 60% are using Natural Language Processing (NLP).
49% of frontrunners have a comprehensive, detailed strategy in
place for AI adoption, which departments are expected to follow,
giving them immediate scale and speed over rival firms.
45% of AI frontrunner firms are investing over $5M in AI
initiatives today, 3X the level of starters or late adopters.

12,000 companies
Close to 3300 companies are focused only on AI
$ 50 billion in value
Out of this, $20 Billion is AI focused

https://thefinanser.com/2019/02/39-fintech-unicorns-valued-147-37-billion.html/

Something
phenomenal is
happening
(Let us Analyze Financial Services Industry)

What is the typical cost structure for a bank
Efficiency
Growth
Interest Expenses
Non Interest Expenses
Interest Income
Fee based income
- Provision for bad assets/loans
- Technology (IT)
- People (Salary/Perks)
- Branches/Infrastructure
- Others

Efficiency
Growth

30% Of Bank’s workforce is
Operations and Compliance Staff

Efficiency
Growth
Transactions moving away from
banks (fee income)
Data Storage Cost
Network Cost
Interest Income
IT Infra/platform costs
(due to cloud computing)
Customer Acquisition Cost
Customer Loyalty
Human Resources Cost
Regulations
Computing Power availability
Distribution Cost
Competition from Start-ups
Industry Dynamics are changing fast

Business Value For the Bank

For Example

Maturity Levels of different use cases

Conversational
AI

Cloud based FinTech Platform
Can be implemented within weeks instead of
months
The platform comes with pre-trained data,
workflows, connectors and ontology for banking,
cards, payments and loan products, and the
dashboards
Allows technology teams to configure, design and
architect conversation experiences with advanced
natural language processing tools and deliver
great conversations with their consumer through
apps, messaging, voice and IOT devices.

Lets just watch this video…

Customer
Onboarding and
KYC

Lets just watch this video…

Bancolombia’s Plink platform combines the Colombian bank’s huge store of
customer data with analytics and AI to create value for both merchants and retail
customers.
Plink acts as an easy-to-use analytics platform for merchants, providing them
with powerful insights into their customers and competition drawn from
Bancolombia’s data on its 10 million customers. Merchants can also upload
customer offers through Plink.
Plink uses a machine learning algorithm to present these offers to customers
based on Bancolombia’s customer data. The system also solicits ratings for the
offers from customers, which it uses to grow more effective over time.
Bancolombia developed Plink to provide merchants with more insights into their
customers, to make customer offers more timely and relevant, and to experiment
with new business models. Since its launch it has surpassed Bancolombia’s
expectations.
And, perhaps most exciting of all, Plink was built by a small team and went from
initial idea to launch in just 12 months.

Credit Scoring,
Pricing or
Underwriting

Aggregates more than 750 merchants
under one app for purchases
Affirm uses proprietary technology to
verify identity and assess credit risk in
seconds by utilizing more sources of
information than conventional FICO
models, enabling it to provide financing
to a broader set of consumers.

Lenddo Started in 2011, HQ in Singapore
By 2014, they were offering the “world’s first” Facebook-only loan platform.
At the start of 2015 - four years and £20 million later - they began to offer a
credit scoring and identity verification service to other financial institutions
Lenddo claims to have scored more than five million people and to operate
in over 15 markets, including Kenya, South Africa, India, and Australia.
At the end of 2017, Lenddo merged with the Harvard-founded scoring
company The Entrepreneurial Finance Lab (EFL). One of the tools EFL uses for
credit scoring is psychometric testing – for example, analysing applicants'
answers to an online quiz, as well as factors such as how long they take to
answer the questions.
Explainable AI
Responsible AI
Ethical AI
Lets just watch this video…

Customer Loyalty
And Marketing

1. Customer
Experience
Revolution

2. AI
Analyzed
Personalized
/ Customized
Advisory

3. Risk
Mitigation :
Fraud
Prevention/AM
L/Compliance

How do banks
Implement / roll out
Typical AI solution

Software is eating the world
AI will eat software !
(a coffee table conversation in FinTech world today)

Q & A

Thank you
Presented by Niraj Vaidya
contact.nyruj@gmail.com
http://in.linkedin.com/in/nirajvaidya
https://twitter.com/n_y_r_u_j