AI and technology to commoditize the fintech Industry

The last few years have witnessed an unprecedented boom of the fintech sector, due to the rapid digitization of finance-related processes such as payments, lending, wealth management, insurance, and more. Globally and in India, established financial institutions and start-ups alike are driving the adoption of fintech solutions through product innovation, continued investments and industry partnerships.

Govt-led initiatives like setting up the NCPI, Digital India Programme and Jan Dhan Yojana are contributing to the industry’s growth, resulting in wide-scale adoption among both individuals and businesses. Moreover, advancements in automation, AI and Blockchain technologies are expected to further transform customer experience and product offerings.

Artificial intelligence and other technologies are playing a major role in the commoditization of fintech. This is because AI-powered solutions are making it possible to automate many of the tasks that were once done manually by financial professionals. This automation is leading to a number of benefits, including: Reduced costs, Improved efficiency and Enhanced customer service.

In 2022, worldwide funding for fintech amounted to $75.2 billion, indicating a decrease of 46% compared to 2021 but a notable increase of 52% compared to 2020. The United States emerged as the frontrunner in funding and deals, with Europe and Asia following closely in the fourth quarter of 2022. This industry is on the verge of exponential growth and is poised to use AI extensively. The global AI in the fintech market is projected to reach $26.67 billion by 2026, expanding at a CAGR of 23.37% between 2021 and 2026.

AI will play a pivotal role in shaping the fintech industry's future, revolutionizing how companies operate and compete in an increasingly crowded market. AI will bring significant advancements in data analysis, predictive modelling, enhancing the overall customer experience.

As a result of these benefits, AI-powered solutions are becoming increasingly commoditized. This means that they are becoming more widely available and affordable, which is leading to increased competition in the fintech industry. This competition is forcing financial institutions to innovate and adopt new technologies in order to stay ahead of the curve.

The use of AI and other technologies is likely to continue to commoditize fintech in the years to come. This will lead to increased competition and innovation in the industry, which will ultimately benefit consumers.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA