AI in BFSI Market by Component (Solution and Services), Application (Front Line, Mid Office, and Back Office), End-use (Bank, Insurance, and Others), and Regional Analysis (North America, Europe, Asia-Pacific, and LAMEA): Global Opportunity Analysis and Industry Forecast, 2021–2028

Global AI in BFSI Market Trend

The global AI in BFSI market size is predicted to garner a revenue of $84,337.5million in the 2021–2028 timeframe, growing from $21,067.8 million in 2020, at a healthy CAGR of 19.1%.

Market Synopsis

Increase in the demand for AI based virtual assistants and solution for customer service support might drive the global AI in BFSI market growth.

However, lack of awareness about AI based solutions and privacy concerns might limit growth of AI in BFSI market.

According to the regional analysis of the market, the Asia-Pacific AI in BFSI market share is anticipated to grow at a CAGR of 19.5%, by generating a revenue of $26,920.5 million during the review period.

AI in BFSI Market Overview

Conversational artificial intelligence (AI) denotes to application that people can communicate with, such as solution and virtual agents. They use big data, natural language processing, and machine learning to help replicate human interactions, such as identifying audio and text inputs and interpreting their meanings across different languages. Natural language processing and machine learning are combined in conversational AI. These NLP procedures enter into a continual loop with machine learning processes, allowing AI algorithms to develop over time. AI in BFSI comprises key components that enable it to process, comprehend, and respond in a natural manner.

Covid-19 Impact on AI in BFSI Market

AI in BFSI has been moderately impacted due to the outbreak of coronavirus. The customer service business was among the hardest damaged when the COVID-19 outbreak brought the entire world economy to a standstill in the spring of 2020.

However, with the increase in the usage of technological advancements, the market is expected to grow at a faster rate during the post-pandemic period. Businesses are taking a more strategic approach to their continuing operations, bringing flexibility and scalability to their operations. AI in BFSI is moving to the forefront of application while also aiming to improve operational efficiencies.

Increase in the Demand for AI Based Security Features is Anticipated to Drive the Market Growth

Businesses must be prepared to give real-time information to their end-users as mobile devices become more widely used in people's daily lives. Customers may interact with brands more rapidly and frequently using AI in BFSI technologies than with human workforces because they are more accessible. Customers can avoid long call center wait times thanks to this fast assistance, resulting in an improved overall customer experience. Companies will see higher client loyalty and revenue from recommendations as customer happiness improves. The rapid adoption of chatbot solutions in the bank, retail & e-commerce, and telecommunications industries is propelling the industry forward.

To know more about global AI in BFSI market trends, get in touch with our analysts here.

Lack of Awareness and Privacy Concerns are Predicted to Restrain the Market Growth

AI in BFSI is prone to privacy and security vulnerabilities since it relies on data collection to respond to user questions. Building AI in BFSI apps with high privacy and security requirements, as well as monitoring mechanisms, will assist end-users gain trust in solution, which will lead to more chatbot usage over time. Furthermore, consumers are unfamiliar with solution, virtual assistants, and digital personal assistants, as well as their benefits. India and Brazil, for example, are the largest smartphone consumers, but their knowledge of the benefits of application is lower than in industrialized nations such as Europe and North America.

The Utilization of AI based Technologies such as Robotic Process Automation Natural Language Processing is Expected to Open New Scope of Opportunities for AI in BFSI Market Growth

The implementation of AI based technologies such as AI for BFSI such as robotic process automation (RPA) and natural language processing is expected to open new scope of opportunities for the market in the forecast period. Software that mimics rules-based digital tasks performed by humans, is being applied in banking to eliminate much of the time-intensive and error-prone work involved in entering customer data from contracts, forms, and other sources. These factors are expected to open new scope of opportunities for the market in the forecast period.

To know more about global AI in BFSI market analysis, get in touch with our analysts here.

Source: Research Dive Analysis

The solution sub-segment is predicted to have a dominating market share in the global market and register a revenue of $50,606.0 million during the forecast period. The solution sub-segment AI in BFSI market includes chatbots, fraud detection & prevention, anti-money laundering, customer relationship management, data analytics & prediction, and others. The increasing demand r AI based solutions such as voice banking, robo-advice, customer service improvement, biometric authentication & authorization, customer segmentation, and targeted customer offers is aiding the growth of this sub-segment in the forecast period.

The services sub-segment is predicted to be the fastest growing market in the global market and is growing with a healthy CAGR of 19.5% during the forecast period, by generating a revenue of $33,731.5 million by 2028. By using AI services, financial institutions such as banks are able to automatically classify large volumes of unstructured text documents and categorize hundreds of thousands of queries into types and ensure they are routed to the right team for resolution. This allows for faster resolution of complaints, benefitting the consumer.. These factors are expected to aid the growth of this sub-segment in the forecast period.

Source: Research Dive Analysis

The front line sub-segment is anticipated to be the most dominating during the forecast period and generate a revenue of $45,246.8 million by 2028, growing from $11,567.4 million in 2020, with a CAGR of 18.8%. The banks are leveraging AI on the front line for smooth customer identification and authentication, mimicking live employees through chatbots & voice assistants, deepening customer relationships, and providing personalized insights & recommendations. The increasing utilization of artificial intelligence in functions such as customer targeting, customer analytics, customer profiling, investment portals, trading, lending, financial advice, and others is expected to aid the growth of this sub-segment in the forecast period.

The back office sub-segment is anticipated to be fastest growing during the forecast period and generate a revenue of $ 16,792.8 million by 2028, growing, with a CAGR of 19.7%. In the back office, the AI-enabled fraud detection can allow banks to accurately predict if an account is at risk. AI can help eliminate human error from compliance processes, a challenging area for many financial institutions. From extending investment opportunities to the underbanked and the average investor, to detecting fraud and mitigating investment risks, these factors are expected to aid the growth of this sub-segment in the forecast period.

Source: Research Dive Analysis

The bank sub-segment is anticipated to be the most dominating during the forecast period and generate a revenue of $38,893.2 million by 2028, growing from $10,004.6 million in 2020, with a CAGR of 18.7%. The implementation of AI in banking has advantages such as personalization AI can generate customer insights that can be used for personalized communication, advice, offers, and services. In addition to this, there are productivity gains and nearly the top 20% of back-office work accounts for 85% of the cost. The use of AI in banking for labor-intensive work like compliance reporting, new customer on-boarding communications, and others is expected to aid the growth of this market in the forecast period.

The insurance sub-segment is anticipated to have the fastest market growth during the forecast period and generate a revenue of $29,881.8 million by 2028, growing with a CAGR of 19.7%. In the insurance sector, AI can enable insurance companies to provide quality advice to customers by removing human error and implementing AI-powered insurance management tools for underwriting, customer service, and others. These factors are expected to aid the growth of this market in the forecast period.

Source: Research Dive Analysis

The Market for AI in BFSI in North America to be the Most Dominating

North America is anticipated to have the most dominating AI in BFSI market during the forecast time period and reach $32,706.1 million by 2028, with a CAGR of 19.0%. In the north America region, the US has been dominating the investments in AI. According to the AI Index Report (2019), the number of startups in USA was more than 3000 in 2000-2016 that is 37% of the world,) and funding $20.7 billion, that is 70% of world total. In addition to these, investments by the government such as in 2020, the US government announced a plan of public investments of more than 1 billion in the AI domain are expected to aid the growth of AI in BFSI market in the North America region.

The Market for AI in BFSI in Asia-Pacific to be the Fastest Growing

Asia-Pacific is anticipated to have the fastest growing AI in BFSI market during the forecast time period and reach $26,920.5 million by 2028, with a CAGR of 19.5%. During the projected period, the AI in BFSI market is expected to see significant growth and acceptance of solutions across the APAC region. APAC countries are technologically advanced and provide significant investment and income prospects. China, Japan, Singapore, and India are among these nations. The expansion of the AI in BFSI market in APAC is likely to be aided by factors such as flexible economic conditions, government policies that promote industrialization & globalization, and digitization.

Competitive Scenario in the Global AI in BFSI Market

Product launches and mergers & acquisitions are common strategies followed by major market players.

Source: Research Dive Analysis

Some of the leading AI in BFSI market players are Microsoft Corporation, Amazon Web Services (AWS), Inc., Oracle Corporation, Salesforce.com, Google LLC, Avaamo, Inc., Intel Corporation, Amelia, Baidu, Inc, and SAP SE.

Porter’s Five Forces Analysis for the Global AI in BFSI Market:

• Bargaining Power of Suppliers: AI in BFSI market contains moderate concentration of distributors & suppliers and therefore, the distributors & suppliers’ control is predicted to be reasonable, resulting in moderate bargaining power of dealers.
  Thus, the bargaining power of the suppliers is considered to be moderate.
• Bargaining Power of Buyers: Buyers might have moderate bargaining power, because of moderate players functioning in the AI in BFSI market. Therefore,
  the bargaining power of the buyer is moderate.
• Threat of New Entrants: Companies entering the AI in BFSI market are adopting technological innovations such as artificial intelligence to attract clients. But, since the investment cost is high,
  the threat of the new entrants is moderate.
• Threat of Substitutes: There is currently no alternative products for conversational AI.
  Thus, the threat of substitutes is low.
• Competitive Rivalry in the Market: The competitive rivalry among industry leaders is rather intense, especially between the global players such as Microsoft Corporation, Oracle Corporation, and Salesforce.com. These companies are strengthening their footprints worldwide. 
  Therefore, competitive rivalry in the market is high.