“AI can trigger fintech revolution”

With the rise of financial technology (fintech), it is expected that companies will offer more financial services to customize their customer journey, improve the overall user experience and generate alternative revenue streams.

Provenir, a decision-making platform powered by artificial intelligence, believes that integrating start-ups with artificial intelligence (AI) and efficient data management can trigger “a fintech revolution” that will transform industries in the country.

This is in line with the growth of the local fintech market, which has seen a significant 224 percent increase in value from $3.4 billion to $11 billion in 2016 to 2021, indicating that Filipinos use at least one fintech service every second.

As mobility restrictions amid the ensuing pandemic constantly result in strong demand for digital services, businesses “need to adapt at a very high speed,” according to Provenir’s managing director for Asia-Pacific Bharath Vellore.

“AI in fintech opens the doors to the digitization of credit-rich verticals and diversifies products and opportunities. Agility and speed of personalization play crucial roles in providing personalized offers to customers, helping in hyper-growth, he said during a recent forum.

Smart tools like AI can translate large amounts of data into valuable insights like consumer patterns that help with fraud detection and business risk decisions.

“AI also helps organizations discover new patterns in data that enable them to serve a much wider base of people,” Vellore said, adding that it can also reduce transaction costs, improve data management and increase employee productivity.

Through AI, patterns can be identified in a large variety of alternative, traditional, linear and non-linear data. It can also enable highly accurate decisions even for consumers considered “thin filers” or those without files.

This promotes financial inclusion as fintech companies and financial service providers can support the unbanked, who are over 70 percent of the population in Southeast Asia and around 47 percent of Filipino adults.

“AI can create alternative credit scores for the consumer lending space,” GM said, saying it could replace the traditional FICO score used by banks for consumer risk assessments and legacy underwriting, which are slow processes in lending transactions.

Considering the emergence of fintech solutions for different users, 77 percent of financial institutions have focused on innovation to strengthen customer retention. These days, AI is prominent in mobile app features like “frictionless” customer onboarding via facial recognition.

But this technology goes beyond the superficial. AI can reveal complex and unexpected variables that cannot be derived by manual analysis alone. It can “advise managers on how to use the information to increase profits.”

“Through AI, an e-wallet is no longer just a channel to pay bills, but is now also a bank, containing your investment portfolio, insurance policies and much more. A ‘super app,'” Vellore said.

The Philippines has steadily transitioned into an AI powerhouse in Southeast Asia as the country leverages this technology to boost local businesses’ regional and global collaboration.

Spearheading this is the Department of Trade and Industry, which launched a national AI roadmap last year, making the Philippines one of the first 50 nations worldwide to do so.