Artificial Intelligence (AI) in BFSI Market Size, Share, and Trends 2024 to 2033

Artificial Intelligence (AI) in BFSI Market Size and Forecast

The global artificial intelligence (AI) in BFSI market size was USD 26.31 billion in 2023, calculated at USD 31.61 billion in 2024 and is expected to reach around USD 164.97 billion by 2033, expanding at a CAGR of 20.15% from 2024 to 2033. An increased surge in the digitalization of the finance sector needs to integrate with cutting-edge technologies like AI-based solutions to become a consumer-centric sector, which are the significant factors propelling the market globally.

Artificial Intelligence (AI) in BFSI Market Key Takeaways

• North America accounted for the largest share of the global Artificial intelligence (AI) in BFSI market in 2023.
• Europe is expected to host the fastest-growing market during the forecast period.
• By region, Asia Pacific is projected to expand at a notable rate in the global market in the upcoming years.
• By component, the solution segment held the highest share of the market in 2023.
• By component, the solution segment is expected to record a prominent growth during the foreseeable future period.
• By technology, the machine learning segment is estimated to generate substantial revenue in the market in 2023.
• By application, the customer service segment is anticipated to grow at the highest rate in the market over the forecasted years.
• By end use, the bank segment will likely expand significantly in the upcoming period.

Market Overview

The artificial intelligence (AI) in BFSI market refers to the integration of advanced technologies together, which aids in streamlining the various financial processes. BFSI stands for banking, financial services, and insurance. AI has a spectrum of applications in the BFSI market; it is incorporated with chatbots to help and support consumers, predictive analytics for risk assessment, fraud detection algorithms, and customized recommendations about financial status. Due to such a wide range of benefits, artificial intelligence (AI) in BFSI market is poised to grow significantly during the foreseeable period.

Furthermore, AI helps reduce repetitive errors and assist in the automation of routine tasks, therefore enhancing the overall cybersecurity of the system. Also, automation supported by AI is strengthening back-office operations by improving efficiency and helping create cost-effective solutions. In the management of risk and its outcomes, AI plays a critical role in fraud detection and meeting regulatory compliance. Overall, the artificial intelligence (AI) in BFSI market is witnessing a rapid surge globally and is headed towards becoming a highly dominant part of the various sectors to grow exponentially.

Artificial Intelligence (AI) in BFSI Market Growth Factors

• BFSI has culminated towards adopting AI-powered technologies to support their regular work and provide online assistance in the form of chatbots for the consumers out there.
• To provide customized services and enhance consumer interaction, the banking and finance sector uses machine learning algorithms and natural language processing-NLP.
• AI is increasingly used to detect fraudulent messages and emails as it can process data faster and generate patterns more easily than human efforts.
• Increased digitalization of financial transactions on a global scale.
• Rising deployment of AI in risk management and predictive analytics.

Artificial Intelligence (AI) in BFSI Market Scope

Artificial Intelligence (AI) in BFSI Market Dynamics

Driver

Strategic decision-making is based on a huge dataset

The major driving factor of the artificial intelligence (AI) in BFSI market is data-driven decision-making processes, which led to the exponential growth of enterprises within a specific time frame and boosted the growth of the market globally. AI helps BFSI institutions analyze huge amounts of historical data by using machine learning algorithms for precise decision-making, which helps institutions expand.

Along with datasets, AI can analyze the behavior patterns of specific groups of consumers and market trends based on their behavior, which generates accurate predictions. Such a data-driven decision-making approach helps in early fraud detection, enhances risk assessment, and provides customized financial services.

Moreover, in the BFSI sector, AI technologies like virtual assistance and chatbots provide instant replies to consumer queries, help in routine tasks, and offer suitable recommendations. Such interactions between AI chatbots and human consumers are revolutionizing the BFSI sector. Increasing consumer engagement results in an increase in selling capabilities while improving loyalty and customer satisfaction.

The BFSI sector is more sensitive towards fraudulent activities, which needs to be pre-recognized to restrict the huge loss in these firms and protect them with robust security systems that are provided by artificial intelligence. It can identify dissimilar patterns in the data and transaction anomalies and aids in instant detection and preventive steps to apply and prevent data from fraudsters. Due to such unprecedented support provided by AI, the Artificial intelligence (AI) in BFSI market is poised to grow substantially in the global market.

Restraint

Concern about data security

A major restraining factor that holds the potential to impede the artificial intelligence (AI) in BFSI market is the rising concern over data security, as BFSI institutions hold highly sensitive data and are prone to frequent data breaches due to their confidentiality. Since AI systems completely depend upon a huge amount of consumer information/organized Data to perform analysis and gain insights from it to plan a strategy, the risk of data leakage and unauthorized access by fraud has been increasing, leading to serious legal challenges.

The BFSI market works under certain regulations to perform smoothly without complications and adhere to regulatory compliances. The constantly changing and evolving nature of the complex regulations in the BFSI market creates a barrier to implementing the integrated AI system in the BFSI sector, as the banking and finance sector must follow updated rules and evolving compliance requirements over time. Thus, these are the restraining factors in the artificial intelligence (AI) in BFSI market, which needs to be acknowledged and grow beyond it by implementing a robust solution against it to work smoothly.

Opportunity

Rising preferences for personalized financial services

The significant opportunity an Artificial intelligence (AI) in BFSI market could hold is an increasing trend for personalized financial services due to its number of benefits and customization as per consumers' comfort and requirements. Generalization of BFSI services may not help foster the growth of the market exponentially as every consumer has a different financial background, views, and future plans that require customization to work at its best. Here, AI can work better to segregate the consumer's data and make useful insights from it to build personalized strategies to offer the best outcomes while providing security and individual preferences.

By predicting future trends based on historical data and empirical results with its analysis, AI can offer personalized suggestions for investment possibilities and financial products. Along with this, by providing a highly secure system to protect sensitive and confidential finance data of consumers, the chances of data breaches and unauthorized access get eliminated on a larger scale. It helps build the trust of consumers in particular banks or finance institutes, which eventually boosts the market growth and, therefore, increases the demand for AI-based solutions in the BFSI sector, fostering the market worldwide with rising popularity and creating a lucrative opportunity in the Artificial intelligence (AI) in BFSI market.

Component Insights

The solution segment held the highest share of the artificial intelligence (AI) in BFSI market in 2023. The growth of this segment is owing to the continuous efforts by financial institutes to perform smoother consumer interactions, mitigating the risk of fraud with standard legal compliance by leveraging the AI platforms in the BFSI sector. Financial institutes need to integrate AI solutions to digitalize their business so that it reaches the maximum people.

• In June 2022, kiyaverse is the first ever banking metaverse launched by an Indian company, kiya.ai, a developer of digital solutions particularly for the finance sector and governments.

The solution segment is expected to record a prominent growth in the artificial intelligence (AI) in BFSI market during the foreseeable future period. The segment is proliferating in the global market due to the increased use of digital banking services, causing the generation of vast amounts of digital data that need to be analyzed to gain insights from it, which aids in developing consumer-centric models of business.

Technology Insights

The machine learning segment is estimated to generate substantial revenue in the artificial intelligence (AI) in BFSI market in 2023. The machine learning process can be employed to analyze a number of use cases, such as analysis of market impact, management of risk, automation process in the banking sector, and financial monitoring with real-time data. Such benefits can be derived from the use of machine learning technology, which is the major cause of driving this segment globally.

Application Insights

The customer service segment is anticipated to grow at the highest rate in the Artificial intelligence (AI) in BFSI market over the forecasted years. The proliferation of this segment is due to the increasing demand for personalized experiences for consumers to gain trust and credibility by using AI-based solutions, which has created hype and become a trend now.

• In July 2022, a supplier of digital customer service, GLIA, launched a GVAs-glia virtual assistant to offer a seamless experience incorporated with human support and virtual assistant.

End-use Insights

The bank segment will likely expand significantly in the the Artificial intelligence (AI) in BFSI market in the upcoming period. The growth of this segment is due to the proliferation of various AI platforms to support financial institutes, in particular, Banks, and it's adopted by various private and government banking enterprises to support personalized consumer services while generating new value propositions. Leveraging AI-driven technology in the banking sector enhances user experiences and streamlines repetitive processes.

• In December 2022, to enhance the user experiences by advancing AI-ML platforms in the finance service industry, a major key player in the market- NVIDIA, made a multiyear innovative partnership with Deutsche Bank.

Regional Insights

North America accounted for the largest share of the global artificial intelligence (AI) in BFSI market in 2023. The growth of this region is due to the increasing number of start-ups that are AI-based and provide innovative solutions by leveraging cutting-edge AI technologies, which help resolve the banking sector's problem and reduce hindrances in their transaction and other processes. Similarly, these AI-based solutions can be applied to further financial service and insurance sectors, propelling the growth of the North American market worldwide.

Europe is expected to host the fastest-growing Artificial intelligence (AI) in BFSI market during the forecast period. The region has a favorable policy to develop AI-based solutions across the region, which is the major factor propelling market expansion. The European government has an AI act that supports a similar legal framework for AI across every industry, which further supports a disciplinary development of AI-based platforms tailored for every industry. Moreover, by using an AI platform for credit assessment, a non-conventional strategy can be used to gather data, such as collecting data from social media platforms and digital footprints and evaluating creditworthiness on the basis of transactions done in the past.

Asia Pacific is projected to expand at a notable rate in the global artificial intelligence (AI) in BFSI market in the upcoming years. The expansion of the artificial intelligence (AI) in BFSI market across Asia Pacific is due to the rapid digitalization of the banking sector in this region and an increasing number of financial technology businesses in India. Countries like China and India are emerging economies across the world; both are engaging in the development of AI-driven solutions and trying to capitalize on them on the global market. To achieve this target, fintech companies in India are leveraging cutting-edge technologies to deploy AI-based services and solutions for the lending landscape in the finance sector, particularly while providing innovative ideas for lending amounts from banks.

Artificial Intelligence (AI) in BFSI Market Companies

• Google (U.S.)
• Microsoft Corporation (U.S.)
• Amazon Web Services Inc (U.S.)
• IBM Corporation (U.S.)
• Avaamo Inc (U.S.)
• Baidu Inc (China)
• Cape Analytics LLC (U.S.)

Recent Developments

• In April 2023, IBM launched a new security suite that aims to improve and harmonize the security analyst experience throughout the whole incident lifecycle. Named as The IBM Security QRadar Suite. It includes all essential threat detection, investigation, and response capabilities and is considered a major advancement and expansion of the QRadar brand.
• In June 2023, Amazon Web Services, Inc. (AWS) announced that Banco Bilbao Vizcaya Argentaria, S.A. (BBVA), a global banking leader, will use AWS to deliver advanced analytics and data services in the cloud, taking a decisive step in its data and artificial intelligence (AI) transformation process.
• In January 2022, Cadbury started an initiative to let small business owners create their AD for free using the face and voice of the celebrity with the help of an AI tool.

Segments Covered in the Report

By Component

• Solution
  • Chatbot
  • Customer Behaviour Analytics
  • CRM, Data Analytics & Visualization
  • Fraud Detection
  • Others
• Service
  • Professional Services
  • Managed Services

By Technology

• Computer Vision
• Machine Learning
• Natural Language Processing
• Others

By Application

• Back Office/Operation
• Customer Services
• Financial Advisory
• Risk Management & Compliance
• Others

By End-use

• Bank
• Insurance Company
• Wealth Management Institutes

By Geography

• North America
• Asia Pacific
• Europe
• Latin America
• Middle East & Africa