The fintech industry opportunity in Asia is set to directly compete with North America and blow Europe out of the water
As the industry continues to show promise, the fit between artificial intelligence and the fintech industry is better than kaya and toast. The fintech business model is built on the ability to discover, gather and present massive amounts of data in an actionable format — and AI is specifically designed to automate these processes.
Machine learning technology can be used in automated risk assessment for lending, stock trading analysis, predictive analytics for corporate investing and day-to-day functions like improving customer service and building persuasive pitches.
Unsecured loans, or loans in which the borrower does not have to provide collateral (think credit cards, student loans or personal loans), are set to directly benefit from advancements in both analytics and computing capabilities.
The UK-based research firm projected that, between 2016 and 2021, revenue growth from unsecured loans, tied directly to machine learning advancements, would jump by 960 per cent during the five-year-period.
This jump would translate to a US$17 billion revenue growth globally — with the Asia Pacific region accounting for about 40 per cent of this growth.
That number would put Asia just below North America and significantly above Western Europe in terms of revenue. Latin America, the Middle East and Africa, and Eastern Europe were only projected to see a tiny piece of this pie.
For the purpose of the study, Juniper defined AI/Machine Learning as:
“A computer program that uses a combination of digital building blocks, such as mathematics, algorithms and data to solve complex problems normally performed by humans”.
The reason for this revenue jump is the nature of fintech is to traffic in risk assessment, so the Juniper analysis is projecting the financial gains made from lending decisions backed by accurate, high-tech data analytics.
However, data analytics have been around for years, so why the jump now?
A major contributor to this revenue jump is the significantly lower financial barrier to entry, specifically thanks to the combined improvement in Big Data, cloud computing and Graphic Processing Unit technology.
Furthermore, major companies like Amazon, Facebook and Alphabet make a lot of money selling their AI technology. They can afford to offer the product at a relatively affordable price and small companies do not need to develop their own AI support infrastructure.
Juniper called it a ‘feedback loop’, in which major service providers can use their resource advantage to offer attractive technology that a fintech startup would never be able to afford on their own.
Finally, the report noted that US investment into AI technology has increased by 600 per cent over the last five years, signalling an expectation that machine learning will become an evermore important part of our day-to-day business lives.
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