Artificial intelligence and data-fanatic, a technical contributor and strategist; Shubhradeep Nandi is driving PiChain towards its organisational goals and mission as its Co-founder and CEO. Shubhradeep is an ardent enthusiast of Data Science & AI as well as a business enthusiast. In his earlier stints both as an Entrepreneur and Intrepreneur, Shubhradeep has successfully built autonomous multi-functional product teams, done sales, and has successfully delivered value for several customers. He holds specialisation in Data Science and Business Analytics from IIM, Bangalore and also did a project on Start-up Engineering and Computer Science from Stanford University. He has a total of 12+ years of industry experience with 5+ years in Data Science and Artificial Intelligence.
- How has the FinTech Industry evolved in the past year?
The Fintech and RegTech industries are undergoing a radical reformation. Below are few pointers and trends that is likely to shape the upcoming future of fintech industry:
Localization and Regulations
Fintech has always been known for their coming of age technology owning towards offering the most convenient and flexible options for consumers. It is not surprising that going forward, financial services will offer a customized and local offering to their customers using data analytics. The analytical tools are helping regulators to compare scenarios to avoid potential risks and market-related problems. As the needs and demands for financial transactions are increasing, payments and the banking industry have been evolving also continuously. The best kind of consumer experience and quick responses to regulatory changes will matter the most. Now, it is only a matter of time to see how high the Fintech market will continue to grow and at what scale.
Invisible payments take physical payment methods such as cash, debit and credit cards, completely out of the equation—creating a convenient and speedy experience. The demand for cashless transactions in this pandemic-hit economy is expected to create more opportunities for digital wallet operators. The transactions that are digitally linked will not just help to boost transactions but will also help the industry in collecting data. This data can then be used to offer new services. Thereby, creating new revenue streams, providing unbundled offers, and building cost-effective set-ups for businesses to grow.
Communication and consumer education: Increase in customers getting onboarded on digital platforms, fintech’s will have to focus on building trust and consumer engagement. Especially given the time when cybersecurity is extremely vulnerable. Communication is one of the major keyways to drive engagement with consumers. While the digital payment process might not be new for some segment of consumers, it is entirely a new process for another segment of people. Thus, it becomes the brand’s responsibility to build transparency in communication and make the consumers aware of all the activities in a simple way, so they can understand fraudulent activities beforehand.
One platform, multiple services: One thing a consumer prefers the most would be, multiple services across one platform. Many Fintech brands have already rolled out this process of offering multiple services across one app, but the increase in offerings of robust solutions through powerful API integrations will add on. In the coming days, consumers who need banking services are likely to turn to those financial players, who can offer convenience and ease of transactions that are entirely safe and secure. To address these consumer needs, banks cannot do much, but technology can help a lot in digitizing consumer demand.
Blockchain and big data: Blockchain and Big Data are two technologies in full swing, but they are also two complementary technologies. Financial services will be able to reduce fraudulent activities, phishing attacks and ensure secure payments. One of the other things that Fintech needs to bring their attention to is—Artificial Intelligence, Machine Learning and Data Analytics. As all these can help financial services in addressing their key challenges like cost reduction and scrutinize risky transactions. AI is already helping many address key pressure points, reduce costs and monitor risks on transactions.
- How Fintech Startups Are Stepping Up Financial Services Access?
The socio-economic fabric of the country is very versatile. Over 190 Million people are unbanked and over 350 million people are underbanked consumers in rural and semi urban India
Fintech startups are helping this unbanked and underbanked community, MSMEs to have better financial access. Regulatory technology companies in turn are helping fintech startups onboard them.
Regulatory Technology (RegTech) – It is set to abolish compliance as an entry barrier by designing tools and services aimed at automating compliance tasks, reducing risk fraud, or perfecting authentication and identity management. With RegTech solutions emerging, banks have the opportunity to decrease compliance costs by making use of algorithmic platforms and predictive analytics. More than that, they will also benefit from increased efficiency brought by RegTech startups.
Artificial Intelligence (AI) – FinTech startups are already making use of Artificial Intelligence to improve their solutions and the decisions made with them. One novelty that is intensively being worked on is chatbots. Carrying out financial operations and tracking account activity are just two of the application examples.
Blockchain – Due to the many applications blockchain offers, this technology is steadily becoming more influential in the financial services industry. Security from fraud, low cost of operation, decentralized and transparent operations are only a few of the advantages financial institutions can benefit from.
- Can you tell us more about PiChain Labs? How are PiChain Labs solving complex problems by leveraging the combined strength of AI and Blockchain?
The small yet efficient team of PiChain believes that the Finance & Banking industry is gradually adopting technology to cater to the growing compliance requirements and regulations. Only cutting-edge technologies like Artificial Intelligence (AI) and Blockchain can fulfil these requirements. DeepPi is PiChain’s marque DeepTech platform. It augments Compliance officers to provide faster, better and accurate decisions by rapid knowledge extraction, tacit knowledge capture and precision recommendations. It uses a plethora of topnotch AI algorithms and Blockchain modules customised to perform best together. This is how PiChain has brought a revolution even to the Finance sector in India.
- How Fintech platforms tackle the growing cases of financial fraud?
The FinTech platforms have been witnessing tremendous growth over the past few years. Playing the role of a mediator between the associated parties, they optimally use technology to extend a smooth user experience. Amongst the myriad of roles they play, a notable one is that they have been responsible for revamping the financial industry by providing the accessibility and the ease of digital payments.
With the pandemic’s entrance, there was a decrease in cash payments and an increase in online transactions. However, cashless payment is often accompanied with the risk of financial crime. The internet and the technology being easily available and accessible have further led to the increase in financial fraud cases.
In such a situation, the involved parties suffer a huge setback. They struggle to deal with hassles related to finances and cybersecurity. Even though the market is flooded with third-party payment platforms like Google Pay, Paytm, etc. but the concern for financial fraud still remains. The firms have recognized this as an area for concern and hence keep this as a focus in their strategy development.
Fraudulent transactions witnessing a rise: FinTech firms focus on customer convenience but at the same time, they do understand that the safety of the users is primary and that it needs to be addressed. Banking and payment frauds continue to be the major concern for the buyers, the sellers as well as the third-party payment gateways.
The occurring frauds are of two types- one committed by the fake merchant and the other by the fraudsters who steal the financial and personal details of the customer and then misuse it.
While both types of fraud are witnessed on a regular basis, the latter is extremely common and frequent. The cases of fraud by obtaining the KYC details via social media, email or phishing, have been on an increase.
Solutions to tackle the growing cases of financial fraud: In the case to curb financial frauds due to fake merchants, all we can do is to provide the space to only the genuine ones post a thorough detailed background verification and risk analysis.
However, in cases when neither the merchant nor the users are at fault, the solution’s availability lies solely on the shoulders of the FinTech platforms. Essentially this where the upcoming RegTech platforms play their part. Fintech platforms partner with hightech RegTech partners to essentially build a safe regulated and secure platform.
AI and ML solutions: One of the major hacks to avoid financial fraud by FinTech firms is the real-time tracking of the transactions. Machine learning and Artificial Intelligence extend a helping hand in the monitoring of all the transactions, both old and new.
Organizations have now realized the value of technology and use technological innovations to tackle the growing cases of financial fraud. To prevent the occurrence of such fake instances, even the FinTech firms have been making efforts at their end and have been increasingly investing in the latest Artificial Intelligence services.
AI helps catch hold of the fraud merchants by detecting alterations in the transactional patterns in the digital space. If any payment seems off track than the normal ones, AI grabs the same and memorizes it to differentiate between genuine and fake payments in the future. The data collected over the period of time helps in this analysis. The AI algorithms keep a track of the consumer’s payment amount, location, the device used, and time etc. Basically, they keep a track of the consumer’s usage and any change of pattern in the digital transactions is noticed in real-time thereby preventing frauds.
The hackers and frauds constantly keep on coming up with new ways to commit cheating. Hence, the FinTech firms now also focus on strengthening their AI and ML technologies to constantly and instantly come up with new solutions for the new frauds. Additionally, FinTech organizations are also developing password-free authentication to ensure the security of the card users.
Advanced Artificial Intelligence methodologies like self learning and reinforcement learning help systems learn from both internal and external human-system experiences. This human-machine partnership helps the systems become smarter with time and make them capable of tackling newer frauds without further explicit training . Thus enhancing the overall fraud detection process.
Other additional solutions
Focus on IT and security: The firms are diverting their investments in their IT and cybersecurity systems. Such a step helps reduce the occurrence of fraudulent payments. They are also coming up with new solutions like focusing on the use of biometrics log-in procedures of facial recognition, fingerprint scans, etc. which will also help in the reduction of financial frauds and cyber financial crime.
Educating and spreading awareness along with ensuring the customers are informed: The banks have also been making concerted efforts to spread awareness and education about the various scams, the risks involved in digital transactions, and the various plausible solutions and hack to protect our safety from the same. Additionally, even the customers should be informed enough not to share their personal/financial information with any unknown/known third party, access unsafe browsers, input case sensitive passwords, and avoid using/downloading unknown websites. Such minor steps if paid heed to can contribute a lot in the reduction of such financial frauds.