By Pranit Arora
Artificial Intelligence (AI) has evolved from a mere buzzword to a powerful force that is reshaping industries and transforming the way we live and work. With notable advancements in machine learning, natural language processing, and data analytics, AI has acquired unprecedented capabilities, transcending boundaries, and revolutionising industries worldwide. It has become a driving force in diverse sectors such as healthcare, finance, transportation, and entertainment, igniting innovation and providing solutions at an unprecedented pace. The impact of AI is truly global, leaving a profound imprint on individuals and businesses alike, and the fintech industry is no exception to this sweeping wave of AI-driven transformation.
It has the power to revolutionise the way we manage finances, make investment decisions, and conduct transactions. Moreover, AI-powered algorithms are reshaping risk assessment and fraud detection, enhancing security and mitigating potential threats. The integration of AI into financial systems is streamlining operations, reducing costs, and improving efficiency. From chatbots that provide customer support to robo-advisors that offer investment recommendations, AI is transforming the fintech landscape, empowering businesses to deliver better services and empowering individuals to make smarter financial choices.
India is also not foreign to the fintech revolution and is also making waves with the launch of several apps and websites that harness the power of AI for stock market investments, identifying mutual fund investments based on investor risk profiles, execution of large orders, etc. The nascent peer to peer (P2P) lending industry uses AI for analysing vast amounts of data for more efficient creditworthiness evaluations of potential borrowers, underwriting processes, and management of lending portfolios. Notable among the P2P companies using the power of AI to have a very low default ratio is Faircent, one of the first P2P companies to be registered as an NBFC with the RBI.
More specifically, when it comes to stock market investments, one of the biggest pain points of investors is not being able to exit loss making investments at the right time. Univest has used AI to solve this problem. The algorithms basically learn and unlearn the trends of the markets basis 1000+ parameters and give users an early signal related to when an investment can turn bad so that they can take early exits and save themselves from losses. The AI deployed by Univest not only alerts an investor on the exit time of an investment but does this based on individual investing style, short term or long term. Markets are volatile and accuracy of the exit signals also plays a key role in decision making. From launch till date, technology used by Univest has achieved more than 80% accuracy across time periods, market movements and investment styles.
Achieving this consistently at over 80%+ accuracy with more importantly not investing any time and effort on deep research for the evaluation of stocks is something which makes this proposition one of the best available AI based use cases in investments in any country at this moment.
In the realm of AI software, ChatGPT has proven its mettle by outperforming some of the most renowned investment funds in the United Kingdom. During a specific period from March 6th to April 28th, an experiment conducted by the financial comparison site finder.com revealed that a portfolio of 38 stocks selected by ChatGPT achieved a significant gain of 4.9%. In stark contrast, the top 10 investment funds suffered an average loss of 0.8%.
Others like Smartly, a Singaporean robo-advisor that harnesses the power of AI algorithms to revolutionise the way people make investment decisions by identifying the most suitable Exchange-Traded Funds (ETFs) for each investor. Similarly, Scalable Capital, a Germany-based company that redefines investment management by seamlessly integrating human expertise and state-of-the-art algorithms. By leveraging advanced machine learning techniques, this platform effectively analyses market dynamics and skillfully handles portfolios, ultimately providing investors with exceptional risk-adjusted returns.
The future of finance is undoubtedly intertwined with AI, and those who harness its power will have a significant advantage in this rapidly evolving landscape. As AI continues to advance and evolve, embracing its potential will be crucial for businesses and individuals alike. The AI revolution is here, and the fintech industry could witness a transformation that until now was beyond the imagination of even seasoned industry professionals. At the end of the day, it is a win-win situation for investors and fintech companies where leveraging technology will help investors make better and faster investment decisions.
(The author is Pranit Arora. Co – Founder and CEO of Univest, and the views expressed in this article are his own)
