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AI in Banking and Financial Services

  1. Strategic AI in the Financial Services Industry NMIMS University MBA class : Year II : 2019
  2. 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.
  3. End of an Era 1955 1956 Beginning of a new Era
  4. Our day to day affair with AI
  5. Just what is this Big Data, AI and Machine Learning ? (Short Summary)
  6. 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
  7. Netflix was at a crucial juncture after launching online streaming services in 2013. They desperately wanted a smash hit
  8. 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
  9. 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.
  10. Becoming big data company first (& happens to use this to entertain us)
  11. 1997 2011 2016 Chess Garry Kasparov v/s IBM DeepBlue Jeopardy Brad & Ken v/s IBM Watson Go Lee Sedol v/s DeepMind
  12. Deep Learning
  13. Lets just watch this video…
  14. Remember the world of Data
  15. 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
  16. Evidence : Technology is Changing Business Faster than ever 89% Of S&P 500 companies of 1955 Is GONE in 20141955 2014
  17. Evidence : Technology is Changing Business Faster than ever 52% Of S&P 500 companies of 2000 Is GONE in 20142001 2014
  18. Evidence : Technology is Changing Business Faster than ever 2001 2014 52% Of S&P 500 companies of 2001 Is GONE in 2014
  19. Financial Services 17% of Global GDP
  20. Imagine the difference here. Is it the People, Backend Systems and Technology platforms, Age, Market Segment or the DNA ?
  21. Kodak’s downfall wasn’t about Technology Remember Kodak Moment ?
  22. 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.
  23. 12,000 companies Close to 3300 companies are focused only on AI $ 50 billion in value Out of this, $20 Billion is AI focused
  25. Something phenomenal is happening (Let us Analyze Financial Services Industry)
  26. 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
  27. Efficiency Growth
  28. 30% Of Bank’s workforce is Operations and Compliance Staff
  29. 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
  30. Business Value For the Bank
  31. For Example
  32. Maturity Levels of different use cases
  33. Conversational AI
  34. 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.
  35. Lets just watch this video…
  36. Customer Onboarding and KYC
  37. Lets just watch this video…
  38. 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.
  39. Credit Scoring, Pricing or Underwriting
  40. 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.
  41. 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…
  42. Customer Loyalty And Marketing
  43. 1. Customer Experience Revolution
  44. 2. AI Analyzed Personalized / Customized Advisory
  45. 3. Risk Mitigation : Fraud Prevention/AM L/Compliance
  46. How do banks Implement / roll out Typical AI solution
  47. Software is eating the world AI will eat software ! (a coffee table conversation in FinTech world today)
  48. Q & A
  49. Thank you Presented by Niraj Vaidya