The convergence of artificial intelligence (AI) and blockchain is rapidly gaining momentum in the global financial industry. India is no exception, as the country has witnessed a significant increase in the adoption of these technologies in recent years. In this blog, we will explore how the combination of AI and blockchain is shaping the future of finance in India.
Fraud Detection and Prevention
In India, financial institutions are increasingly turning to AI and blockchain to detect and prevent fraudulent activities. According to a recent report by PwC India, the adoption of AI in the Indian financial sector is expected to reach a CAGR of 28.5% by 2025. The report also highlights that blockchain-based fraud detection and prevention is one of the key applications of this technology in the country.
For example, State Bank of India (SBI), the country’s largest bank, has implemented blockchain-based fraud detection to improve the security and transparency of its operations. By leveraging AI algorithms to analyze large amounts of data, SBI can identify suspicious activities and create a tamper-proof record of all transactions.
KYC and AML Compliance
AI and blockchain are also being used to improve Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance in India. As per the PwC India report, KYC is one of the most popular applications of AI in the country’s financial sector.
For instance, ICICI Bank, one of the leading private banks in India, has implemented AI-based video KYC to verify the identity of its customers remotely. By leveraging AI algorithms to analyze customer data, ICICI Bank can ensure compliance with AML regulations while enhancing the customer experience.
Decentralized Finance (DeFi)
The concept of decentralized finance (DeFi) is gaining traction in India as well. With the rise of blockchain technology, DeFi platforms have emerged as an alternative to traditional financial institutions. According to a recent report by CoinDCX, the largest cryptocurrency exchange in India, the country’s DeFi market is expected to grow at a CAGR of 14.7% between 2021 and 2028.
For example, Polygon Technology, a blockchain-based platform, has launched a DeFi protocol called QuickSwap that allows users to swap cryptocurrencies without the need for intermediaries. The platform uses AI algorithms to analyze the risk associated with lending and borrowing activities, making it a secure and transparent platform for users.
In India, smart contracts are being used to automate and secure financial transactions. According to a report by Accenture, India has the potential to become a leader in smart contract adoption due to its strong software engineering talent and a large pool of blockchain developers.
For instance, Axis Bank, one of the leading private banks in India, has launched a blockchain-based platform called “Axletree” that allows corporate clients to automate their payment processing using smart contracts. The platform uses AI algorithms to analyze data and identify potential risks, making it a secure and efficient solution for corporate clients.
The convergence of AI and blockchain is transforming the financial sector in India. From fraud detection and prevention to KYC and AML compliance, DeFi, and smart contracts, the potential applications of these technologies are vast.
As the adoption of AI and blockchain continues to grow, we can expect to see even more exciting use cases emerge, making India a leader in fintech innovation.