By Abhishek Singh
In his key note address at RAISE 2020, Professor Raj Reddy, one of the most accomplished artificial intelligence (AI) thinkers of all times, explained how AI can empower people at the bottom of the pyramid. With voice-over-internet and assistants like Siri, Alexa and Google Assistant becoming available in vernacular languages, millions will be able to access online education, digital libraries, healthcare, agri-services, e-commerce, entertainment and, most importantly, financial services. Professor Reddy estimates this access to potentially contribute a trillion dollars annually to the Indian economy. The challenge now is to get there and ensure transformation of this potential into reality.
Financial inclusion has remained a challenge for India, even though Jan-Dhan accounts have ensured the provision of basic banking services to the poor. Aadhaar-enabled DBT has also not only plugged leakages but also ensured timely benefits and access to cash, especially in the COVID-19 pandemic. All these initiatives need to be scaled up to provide more financial services to the poor, farmers and the self-employed by enabling easy access to credit and ensuring that agriculture activities are supported and businesses are funded to help add value and create jobs.
With the push for increasing farmers’ access to financial services, banks and financial institutions have to be wary of financial frauds and must be equipped to conduct fair credit assessments. AI-based tools can enable all this by using data and machine learning algorithms to detect financial frauds, assess credit worthiness and help banks offer quality advice to customers. AI can also help improve customer service, sales, and retention efforts of banks.
Independent estimates see AI adding $1.2 trillion in value to the financial industry by 2035. AI has grown in significance in finance primarily due to generation of massive amounts of data and low cost of storing and accessing such data, coupled with improvement in computing power and reduction in the cost of computing.
In India, where many people do not have access to brick-and-mortar banks in their neighbourhood, AI-enabled tools are facilitating branchless banking, reducing costs for banks and making financial services accessible. Banks are communicating with people through messaging apps and are educating them about their financial health. AI-enabled chat bots are answering queries 24X7 and helping people understand how things work. Once this is made possible in all Indian languages, and hopefully with a voice interface, it will make financial services even more accessible to all. So, a farmer in rural Nagaland or a fisherman in Kerala can get to know about the credit instruments a bank offers and make a conscious call about which loan to take. Banks can also access data on farm yields or market prices, assess the financial health of a customer and the credit risk without having to physically meet her.
AI being rapidly scalable makes it suitable to the needs of the financial world. The potential of using data analytics and AI algorithms to assess the credit worthiness of startups, MSMEs and emerging tech companies is huge. Many entrepreneurs and tech companies are adopting disruptive approaches to create value by leveraging the available data, and making products and services that have huge potential. Many of these need access to credit in their initial years. The big question then is: How do banks upgrade their capabilities to assess the potential of these entrepreneurs? This will require bankers to reorient the way they assess potential businesses and credit risk, for which they need to understand how technology works and how value is created. This change, backed by algorithm-based analysis of contracts and business models, can transform access to financial services for tech startups and will, in turn benefit banks by opening up new revenue streams.
India, which has room for financial inclusion as also a large middle class, is a great market for AI in financial services. As the world’s third largest startup hub, Indian companies are innovating with AI to design customised solutions for the Indian market. The potential in India is huge given the fact that not only do we have around 700 million internet users but also another 600 million potential internet users who will be on boarded over the next 3-5 years.
With the expansion of fibre-based internet to 600,000 villages over the next three years, the potential of tech-enabled financial services in Bharat is waiting to be unleashed.
India has a base of large and innovative public digital platforms such as Unified Payments Interface (UPI) and Bharat Interface for Money (BHIM), which are utilising AI to empower people by inviting them to participate in India’s digital economy. Consequently, India has emerged as the world’s fastest growing digital payments market. AI solutions developed in India are capable of helping solve problems for the world. Indian companies who invest in and develop these solutions will have a huge potential for growth.
One example of India’s success in developing cutting-edge AI-powered digital platforms for financial inclusion is that India is mulling exporting low-cost digital payments solutions like UPI to other countries.
Trust is of key value in the financial sector. With its rules-based financial infrastructure, proven track-record of compliance and experience of running cost-effective digital financial tools, India is a trustworthy partner of the world and can become its AI garage, developing AI-backed financial solutions for the every country.
India’s underlying mantra in developing AI is encapsulated in #AIForAll. It wants to develop AI bottom-up, to drive financial inclusion and social empowerment. Its AI strategy is firmly rooted in encouraging creation of Responsible AI.
India’s vision for AI is powered by a strong desire for ensuring social empowerment. Technology and AI-enabled financial services are both a strength and opportunity for India to not only ensure financial inclusion in India but also provide financial tools and services to the world.
The author is President & CEO, NeGD, CEO MyGov, MD & CEO, Digital India Corporation, Government of India