AI in BFSI Market worth over $80bn by 2026
Published Date: June 26, 2020 Authors: Preeti Wadhwani, Smriti Loomba
AI in BFSI Market size is set to exceed USD 80 billion by 2026, according to a new research report by Global Market Insights, Inc.
The BFSI sector is leveraging AI technology to gain a competitive edge by implementing the technology to achieve improvements in speed, cost, accuracy, efficiency, and meet customer needs more comprehensively. The AI in BFSI market comprises artificial intelligence-based analytics solutions used in financial institutes for customer analytics, forecasting, back-office operation, virtual assistance, and compliance & risk management.
Growing market demand to improve customer banking experience will fuel the market growth
The growing need to offer enhanced customer experience is the major factor driving the market growth. Growing market competition among key players is mounting day by day, companies are emphasizing better customer experience to retain customers. This growing competition is enabling financial institutes to integrate advanced analytics tools & solutions to analyze customer data to fulfill their requirement, understand the customer experience, and make smarter predictions on their behavior & requirements. The growing adoption of smart devices and internet services across the globe will also fuel the adoption of AI in the BFSI sector.
A growing emphasis on providing 24x7 customer support to boost the demand for chatbots
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The chatbot segment is expected to register around 40% gains during the forecast period due to growing demand to provide better customer experience. Various banks globally are integrating chatbots into their smartphone applications and websites to assist their customers without any delay. The introduction of chatbots in the BFSI sector has improved overall customer engagement and satisfaction. It allows customers to check account balance and receive immediate transaction statements through simple interactions with the chatbots. Factors such as 24/7 availability, immediate query resolving, and up-to-date updates regarding new schemes & programs in the banks have increased the usage of chatbots in the BFSI industry.
Browse key industry insights spread across 250 pages with 412 market data tables and 30 figures & charts from the report, “Artificial Intelligence (AI) in BFSI Market Size By Component (Solution [Chatbot, Customer Behavior Analytics, Customer Relationship Management (CRM), Data Analytics & Visualization, Fraud Detection], Service [Professional Service, Managed Service]), By Technology (Machine Learning, Natural Language Processing (NLP), Computer Vision), By Application (Back Office/Operation, Customer Service, Financial Advisory, Risk Management, Compliance & Security), By End-Use (Bank, Insurance, Wealth Management)” in detail along with the table of contents:
Risk management, compliance, and security service to become the most lucrative application of AI in BFSI by 2026
The risk management, compliance and security segment will grow at a CAGR of over 45% till 2026 propelled by stringent government regulations to protect financial information. Government authorities are focusing on financial regulations to allow banks & insurance companies to have acceptable risk profiles and avoid large-scale defaults & financial crimes such as fraud and money laundering. As a result, these financial institutes must comply with government regulations that require them to know their customers, uphold customer privacy prevent money laundering, monitor wire transfers, and comply with a stack of additional regulations.
Growing need to generate important insights from large digital data will fuel the market demand for NLP technology
The Natural Language Processing (NLP) technology segment is estimated to hold more than 35% AI in BFSI market share by 2026 owing to growing need to analyze massive digital data across financial institutions. The data from the internet, social media, and personal devices provides financial enterprises with unprecedented opportunities to use digital information and improve their business performance. The analysis of this data helps businesses understand the patterns hidden in structured data such as spreadsheets and relational databases. Furthermore, NLP also allows businesses to analyze unstructured data from social media posts, images, email, text messages, audio files, Word documents, PDFs, and other sources that account for over 80% of the data.
Automation in insurance procedures will increase the adoption of AI technology
The insurance application segment is predicted to witness growth of over 45% from 2020 to 2026 led by rising demand to automate different processes across the insurance space from distribution to claims management and risk management to pricing & underwriting. Intelligent algorithms are used to create a customer’s risk profile to fasten the cycle time for completing the purchase of an auto, commercial, or life policy as the process will be reduced to minutes or even seconds. Insurance service providers are also leveraging on the capabilities of AI in BFSI technology to provide usage-based insurance for the automotive sector.
The Asia Pacific market will grow at the highest growth rate over the coming years
The Asia Pacific AI in BFSI market is slated to expand at over 45% CAGR through 2026 driven by growing investments in AI technology and increasing digitalization in the region. Increasing investments from tech leaders, such as Alibaba, Baidu, BTA, and Tencent, in AI technology for the BFSI sector will also drive the market growth. Furthermore, increasing research & development activities are fueling the adoption of AI in BFSI solutions among several industry sectors. For instance, Toyota is leveraging NLP capabilities to develop self-driving cars. Similarly, Honda also announced its plan to develop a new R&D base in Tokyo specifically for AI.
Strategic acquisition is the key market strategy adopted by major players operating in AI in BFSI sector
Major companies operating in the market are emphasizing strategic acquisitions of innovative AI-based start-ups to enhance their AI in BFSI technology capabilities. For instance, in January 2018, SAP SE acquired Recast.AI, a French start-up, that focuses on conversational user-experience technology, to accelerate the development of its Leonardo Machine Learning (ML) capabilities and expand its intelligent software solutions. This acquisition helped the company to enhance its AI in BFSI technology capabilities and expand its product portfolio.
Key players in the market are Amazon Web Services, Inc., Avaamo, Baidu, Inc., Cape Analytics, LLC, ComplyAdvantage Ltd., Descartes Labs, Inc., Digital Reasoning Systems, Inc., Google Inc., Inbenta Technologies, Inc., Intel Corporation, Interaction LLC, IPsoft, Inc., Lexalytics, Inc., Microsoft Corporation, Next IT Corporation, Oracle Corporation, Palantir Technologies, Salesforce.com, Inc., SAP SE, and ZestFinance, Inc.
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