The Artificial Intelligence (AI) in Banking, Financial Services and Insurance (BFSI) Market is set to grow from its current market value of more than $2.5 billion to over $25 billion by 2024, according to a latest study by Global Market Insights, Inc.
The study suggests that the need to provide an enhanced customer experience is the primary factor augmenting the growth of the AI in BFSI market.
As the competition among the market players is mounting day-by-day, companies have started to focus on providing a better experience to the customers to gain the customer loyalty. This encourages financial institutes to integrate advanced analytics tools and solutions to analyze customer data to fulfill their requirement, understand the customer experience, and to make smarter predictions about their behavior and requirements. Furthermore, companies are also looking forward to connecting with the customers on their choice of channels to provide a more seamless experience.
Artificial Intelligence (AI) in BFSI Market
Furthermore, as digitalization is spreading across the globe, customers are becoming more empowered. They have access to a wide array of products offered by the traditional as well as dynamic new entrants. As the choices increase, the customer loyalty becomes more friable and the customer becomes more empowered. The organizations have no option but to remain agile and continuously innovate their business by adopting modern technologies to cater to the high expectations and standards for customers.
The customer behavior analytics solution market is estimated to grow at a CAGR of over 35% during the forecast timespan. The growing demand to analyze the structured and unstructured customer data among the financial institutes to provide a personalized experience to the customers is a major factor affecting the growth of the market. This solution can mine a vast volume of data to extract actionable insights and recommend appealing & personalized offers to the individual customers. Furthermore, the ability of the solution to transform the marketing activities and enhance the customer engagement also drives the demand.
The risk management, compliance, and security applications of the AI in BFSI market are anticipated to grow noticeably at a CAGR of about 40%. The market is driven by the improved demand for advanced machine learning algorithms in Anti-Money Laundering (AML) and fraud detection applications. Unlike the traditional security systems, the AI-powered system can actively learn and calibrate as per the new potential security threats. This solution can detect unique security issues & vulnerabilities and flag the security teams.
U.S. Artificial Intelligence in BFSI Market Share, By Solution, 2017 (USD Million)
The insurance market is estimated to grow at a CAGR of over 38% during 2018-2024. The growth of the market is credited with the adoption of advanced data models and analytics solution among the insurance companies to identify and quantify risks in a better manner. Furthermore, increasing collaboration & partnership activities between the insurers and fintech companies are also the major factors propelling the AI in BFSI market growth.
Europe held more than 20% share in AI in BFSI market. The investments by the tech giants in the region support the market growth. For instance, Amazon Web Services (AWS) invested approximately USD 2.3 million in Max Planck Institute for Intelligent Systems, a Germany-based AI research center for the development of AI and robotics technology. Similarly, in 2016, Google announced the establishment of a new research and development facility in Zurich, Germany.
Asia Pacific AI in BFSI market is estimated to grow at a CAGR of over 40%. The growth is owing to the rising venture capital investments in AI and fintech. China is leading the investment landscape in the Asia Pacific with more than USD 8.0 investment in the fintech sector in 2016. Furthermore, the country also accounts for more than 11% share in the global AI investments in 2016. Similarly, India also accounts for significant investments in the AI and fintech sectors.
AI in BFSI market is highly competitive due to the presence of both multinational companies and start-ups. The players are constantly innovating and developing advanced products to cater to the growing customer demand. The prominent vendors of the AI solution in BFSI sector are Microsoft, Google, Intel, IBM, AWS, Salesforce, Oracle, SAP, Palantir, IPsoft, Inbenta, Lexalytics, Interaction, and Next IT. The multinational companies, such as AWS, Google, and Microsoft, account for the majority of the share in the market. However, some start-ups, such as Inbenta, Lexalytics, and Interactions, also play a vital role in the overall market.