The global AI in BFSI market size is estimated to be valued at $84,337.5 million by 2028, surging from $21,067.8 million in 2020, at a CAGR of 19.1%.
COVID-19 Impact on AI in BFSI Market
Almost every industry has been moderately affected by the COVID-19 outbreak, which has raised churn rate. AI in BFSI market has experienced a negative affect due to the pandemic. The lockdown is having a negative influence on global production, supply networks, and logistics, as well as the continuity of operations in numerous industries.
However, the situation is likely to be under control in the coming years, and demand for AI in BFSI services is anticipated to rise as companies seek to improve customer experience and develop personalized relations with customers.
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Global AI in BFSI Market Trends
The advantage of AI comparing with traditional asset and risk management techniques is the ability to feed data to the prediction algorithms that continuously adapt and autonomously reassess, with the possibility of integrating automated trading decisions. AI-related funds today are one of the sectors that hire most and the best AI-trained workforce, probably more than the Bigtech firms. AI also offers practical solutions for risk classification and consequent decisions for risk management. These factors are expected to increase the growth the AI in BFSI market share.
The low awareness about the adoption of AI based financial solutions in the developing economies especially in the small and medium financial organizations can hamper the growth of the global AI in BFSI market organizations during the forecast period. Moreover, many consumers are not properly aware of AI in BFSI and its uses in chat bots & virtual assistants, which might impact the growth of the market.
The implementation of AI in payment systems of financial institutions is expected to open new scope of opportunities for the market in the forecast period. AI is already broadly adopted for processing payments, helping to detect fraud, fight money laundering, and making the payment networks more efficient, in fact, there is a mix of front-end and back-end activities. Financial institutions have started to implement AI solutions for automated and prompt fraud detection, with cost savings and better performances than human intervention. AI is also currently used to predict the amount of cash bank that branches must hold to meet depositors' needs at the lowest possible cost. These factors collectively are anticipated to provide opportunities during the forecast period.
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Global AI in BFSI Market, Segmentation
The global AI in BFSI sector is segmented based on component, application, end-use, and region.
Component:
The component sub-segment is further classified into solution and services of which the solution sub-segment is projected to generate the maximum revenue during the forecast period. The solution sub-segment is predicted to register a revenue of $50,606.0 million during the forecast period.
The increasing demand for AI based solutions in front-office activities that directly involve financial service customers (e.g., lending, BFSI banking, investment management, and payment systems) and back-office activities (e.g., capital optimization, risk management, and market analysis) is expected to aid the growth of this sub-segment in the forecast period.
Application:
The application segment is further divided into front line, mid office, and back office, out of which the back office sub-segment is projected to grow at a faster CAGR during the forecast period. It is predicted that the market shall generate a revenue of $16,792.8 million by 2028, growing with a CAGR of 19.7%.
The growing application of AI in back-office applications such as fraud monitoring, early warning systems, predictive recruitment models, cyber security, credit scoring and risk management and others is expected to aid the growth of this sub-segment in the forecast period.
End-use:
The end-use segment is further classified into bank, insurance, and others. Among these, insurance sub-segment is expected to be the fastest during the forecast period. It is predicted that the market shall generate a revenue of $29,881.8 million by 2028 with a CAGR of 19.7%.
The financial institutions that provide insurance have to identify the insurance risk coverage for different customers. The application of combining ML with alternative data allows insurance companies to obtain more precise risk assessment, better personalization of insurance contracts, and ultimately more access to insurance. These factors are expected to aid the growth of this sub-segment.
Region:
The AI in BFSI market share in Asia-Pacific is anticipated to be the fastest growing market during the forecast time period and reach $ 26,920.5 million by 2028, with a CAGR of 19.5%.
The countries in Asia-Pacific are technologically advanced and provide promising investment and income opportunities. These countries include China, Japan, Singapore, and India. Factors such as favorable economic conditions, government policies that support industrialization & globalization, and digitization are projected to boost the growth of the AI in BFSI market in APAC.
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Key Players in the Global AI in BFSI Market
Some of the leading global AI in BFSI market players are
- Salesforce.com
- Amazon Web Services (AWS), Inc.
- Microsoft Corporation
- Oracle Corporation
- Google LLC
- Avaamo, Inc.
- Intel Corporation
- Amelia
- Baidu, Inc
- SAP SE.
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