AI is disrupting many industries, from healthcare to banking and financial services. This technology
can be categorized as either strong AI or weak AI (also called narrow AI). It can be defined as a part of computer sciences creating algorithms which try to simulate intelligent human behavior (Caron, 2019).
Ant Group, an affiliate company of Alibaba (the Chinese e-commerce giant), heavily exploits this technology and the opportunities that it brings. The Chinese company serves more than one billion people and more than 80 million businesses. Ant Group offers services such as consumer lending, wealth management, money market funds, health insurance, and credit rating. It relies on Alipay to feed its huge customer database. Alipay is the most widely used online/mobile payment service
provider in China (Ayden, n.d.). Ant Group provides services to many people who did not have previously access to financial services because of insufficient funds or geographic isolation. AI allows the firm to ease and automate financial processes.
One example of the application of AI is for credit rating and giving loans to people or businesses. The algorithms developed by the Chinese company analyse millions of data about its users collected via Alipay or shared by the users themselves. The algorithm then uses the data to adapt the interest rate and the amount of the loan based on the user profile. Thanks to the accuracy of the analysis, Ant Group
enjoys a loan delinquency rate of roughly 1% to 2% (Nikkei Asia, 2020).
The second example of AI application in the Chinese company is for their insurance services. Thanks to an AI-driven algorithm, the insurance claims can be proceeded much faster, in a system the company calls Intelligent Insurance Claims (Alibaba Cloud, 2019). The system improves service efficiency and reduces costs. It consists of three steps. First, one files the complaint in 2 minutes. Second, it takes one second for the claim to be processed. Finally, the individual receives the payment in two hours (Alibaba Cloud, 2019).
References:
Adyen. (n.d.). Alipay payment method. Retrieved September 28, 2022, from https://www.adyen.com/payment-methods/alipay
Caron, M. S. (2019). The transformative effect of AI on the banking industry. Banking & Finance Law Review, 34(2), 169-214. https://www.proquest.com/scholarly-journals/transformative-effect-ai-on-banking-industry/docview/2207836906/se-2
Cho, Y. (2020, November 2). How AI and vast data support Ant Group’s financial empire. Nikkei Asia. Retrieved September 28, 2022, from https://asia.nikkei.com/Business/Finance/How-AI-and-vast-data-support-Ant-Group-s-financial-empire
Competing in the Age of AI. (2021, January 21). Harvard Business Review. Retrieved September 28, 2022, from https://hbr.org/2020/01/competing-in-the-age-of-ai
Qi, A. (2019, December 26). Ant Financial Applies AI in Financial Sector. Alibaba Cloud. Retrieved September 28, 2022, from https://www.alibabacloud.com/blog/ant-financial-applies-ai-in-financial-sector_595687
Nice application example of AI. It should really help the companies with its due diligences dealing with the bulk of loan application process. However, do you think it is ok to have 100% of the loan applications reviewed by AI, completely removing the ‘human touch’? I ask this because AI can analyze all of the hard numbers, but sometimes there are nuances and aspects in a loan application or in a person’s needs that AI can’t capture, hence the need, in my opinion, for a human intermediator in some cases. What are your thoughts?