According to a recent study from market research firm Global Market Insights, the AI in the BFSI market is set to grow from its current market value of more than $5 billion to over $80 billion by 2026, gaining remarkable traction over the 2020 to 2026 period.
AI in the BFSI market will be driven by increasing digitization and government initiatives for promoting the use of AI in the banking sector. With a large and distributed customer base, banks need to keep innovating in order to best serve their customers.
To drive this innovation the financial industry has turned to Artificial Intelligence and machine learning. AI is considered as the future of banking since it brings in the power of advanced data analytics that helps the industry tackle fraudulent transactions and enhance compliance.
With AI algorithms, anti-money laundering activities could be accomplished in a shorter period of time, which otherwise takes a lot of time to develop manually.
Artificial intelligence also allows banks to manage vast amounts of data at immense speed in order to obtain valuable insights.
Some of the features like biometric fraud detection mechanisms, digital payment advisers, and AI bots further lead to the facilitation of high quality services to a broad customer base. All this means reduced costs, increase in profits, and high revenue, fostering industry share further.
AI in the BFSI market is bifurcated in terms of component, technology, application, end-use, and regional landscape.
Based on components, the AI in the BFSI market is classified into solution, and service. The solution segment is further classified into fraud detection, data analytics & visualization, customer relationship management, customer behavior analytics, and chatbot.
Customer behavior analytics segment will witness a CAGR of over 40% over the projected time period since organizations are looking for more advanced ways to understand customer behavior.
The fraud detection segment witnessed a market share of over 15% in 2019 and is expected to register tremendous growth owing to the increasing incidence of financial frauds among the financial institutes.
The service segment is further categorized into managed service, and professional service. Professional service segment witnessed a market share of over 80% in 2019 due to increasing need for deployment and maintenance as retailers are rapidly embracing AI solutions.
The managed service segment is likely to witness an impressive CAGR of nearly 50% over the forecast time period due to the increasing adoption of intelligent algorithms among the managed service providers.
In terms of application, the overall AI in the BFSI market is categorized into risk management, compliance & security; financial advisory; customer service; and back office/operation. The bank office/operation segment will witness a CAGR of over 40% through the analysis period owing to increasing trends of digitalization and automation of banking operations.
From a regional frame of reference, Latin America AI in the BFSI market will witness a CAGR of around 43% over the forecast time frame due to supportive government initiatives for promoting the use of AI in banking services.
Middle East & Africa AI in the BFSI market will witness a CAGR of over 45% over the projected time frame due to the increasing digitalization in the region.