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Artificial Intelligence for Financial Inclusion

February 19, 2018 -  Pooja Golakonda Senior Consultant, Presales, Infosys Finacle

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Next Tide: We need to be ready

The Indian Rural Banking landscape has just seen a major transition, by way of Financial Inclusion under the guidance of RBI. It started with Small savings accounts, Agency banking channel, Aadhaar number, Pradhan Mantri Jan Dhan Yojana, BBPS, BHIM, AEPS payments, UPI etc.

First time in the history of India’s Banking sector, the RBI gave out differentiated licenses by way of 10 Payments bank1 and 11 Small Finance Bank Licenses2 in 2015.

At the other end, urban banking is witnessing another wave of transitions with a number of Fintech players competing to offer banking services by way of Robotics and AI to automate banking by machines.

HDFC’s Ira, the first ‘humanoid’ branch assistant, City Union Bank’s ‘Lakshmi’, and Canara Bank’s ‘Mitra’ are just a few examples of how banks and financial institutions are integrating AI and robotics in their services.

Keeping in view the above two trends and if both these paths merge, sooner or later it may be wise for the Banks to think of ways to take Automation to Rural banking. Furthermore, regulation might also require compliance that can be significantly simplified with automation. banks and the solution providers need to be ready and need to be able to identify what all can be done to employ Artificial Intelligence to enrich Financial Inclusion.

The Journey has just begun!!!

What sources of data do we have, what processes of rural banking can be enriched, who all could be the immediate stake holders, what enhancements would a technical solution require and finally what is the revenue model? These are some of the questions that banks may not yet have ready answers to, since we are still in the starting phase of our AI journey. As I write this thought paper I do see some ready clues which both banks and solution providers can pick and proceed.

Sources of Data: its already there

As on Aug 2017 Over 9.3 crore3 PAN cards linked with Aadhaar numbers.
Recent initiatives of Govt. to link Pan card with all bank accounts, and then to link Aadhaar to PAN Card and mobile number, sets the right path for the required source of data. This can be a good starting point for our data scientists in the AI Journey. Using the Aadhaar linked Database, the government is able to track the number of SIMS a person may have, the number of gas connections, the amount and volume of transactions done on his/her accounts. It facilitates a single Point of tracking and also an easy KYC.

AI Applications: Give it a thought

From the existing banking landscape and the rural customer experience, some of the applications of Artificial Intelligence in Rural Banking that the solution providers and banks can explore are:

Major Stakeholders: What’s in it for me?

Word of Caution: The below view holds good for both rural and urban banking.

Is it worth it?

Considering the small ticket size or value of transactions, banks and technology solution providers might have a tough time testing the economic viability of AI enabled robots in rural areas and villages. So is it really worth it? Yes, and No. Although the transaction values are low the volumes are definitely significant. The initial investment may be high and one may need to wait for the results to come in. However, considering the enthusiastic Indian crowd and the way we welcome new things – the robot will be the center of attraction and can be the overnight hero of the village. As the future unfolds itself, the early risk-takers will have an added advantage as Automation and AI are here to stay for a way long time.

References:

 Pooja Golakonda

Senior Consultant, Presales, Infosys Finacle

More blogs from  Pooja Golakonda >

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