Demystifying Insurtech, Regtech & Fintech: Technology Revolutionizing the Insurance, Compliance and Financial Industry
The concept of Insurtech and how technology is disrupting the insurance industry
Insurtech is a combination of insurance and technology, just like fintech is financial technology it’s the insurance technology. It aims at bringing efficiencies in insurance business through latest technologies like Artificial Intelligence, cloud computing, Internet of things, analytics & block chain. These cutting-edge technologies can be game changer in underwriting, risk profiling through efficient KYC, timely fraud detection, speedy claim management.
Regtech assist financial institutions in managing regulatory compliance
RegTech is made up of two terms i.e., “Regulatory” + “Technology”, It is the technology that enables compliance management. Compliance is one of the key focus areas for the financial institutes these days. Given that this area itself is an evolving field, lot of time and investment goes into this. RegTech helps in timely regulatory monitoring, reporting vulnerabilities and managing those vulnerabilities. Above mentioned goals are achieved through solutions with capabilities in employee surveillance, compliance data management, fraud prevention, and audit trail.
RegTech helps in timely regulatory monitoring, reporting vulnerabilities and managing those vulnerabilities
Potential advantages and disadvantages of using artificial intelligence in credit scoring.
Advantage of using artificial intelligence (AI) in credit scoring is ability to analyze multiple and bigger data sources quickly, unbiased decision making, avoiding the human errors, round the clock availability & lesser operational cost. Looking at above advantages AI puts a stronger case for adoption however here are some of the limitations to consider before deciding, initial implementation cost is higher, it needs bigger training data sets & periodic training of AI model for better decision quality, AI lacks creativity to take out of the box decisions, it has ethical problems in terms of consumer data privacy & also the training data reliability aspect need to be checked carefully else result can be opposite to expectations.
Insurtech leverage technology to disrupt and innovate the insurance industry
Technologies like Artificial Intelligence (AI), cloud computing, Internet of things, analytics & block chain has great potential to change the landscape of insurance industry, here are few of the examples:
•Improving the efficiency of underwriting process using AI
•Better fraud management through blockchain
•Ease of claim settlement using consumer’ device data using IoT
•Customized offerings for consumers using AI & analytics
•Reducing capex by leveraging (cloud) hosted solutions
AI and machine learning influencing the fintech landscape and key security concerns associated with fintech applications, and how can they be mitigated
AI and ML is going to influence almost all areas of fintech landscape, here are few of the examples:
•Faster Decision-making (through big data analytics)
•Better Security (fraud prevention by monitoring unusual activities proactively)
•Customized consumer offerings (in the space of wealth management, insurance, and lending etc.)
•Advanced Chat bots (to answer real time customer queries)
•Faster turnaround (by reducing operational inefficiencies & human errors)
Security is the most important aspect of fintech industry as on date, attacks could come in any form like insider (employee) threats, Phishing (external) attacks, integration issues, data breaches etc. By implementing security best practices like multifactor authentication, strong encryption algorithms, real time notifications, firewall, vulnerability compliance, periodic access review and alert systems for monitoring unusual transaction patterns can help in mitigating such attacks.
Pros and cons of digital wallets and mobile payment systems in the context of fintech.
Digital wallets and mobile payment systems are becoming preferred way of payment day by day because of its ease of use, supporting multiple payment methods (credit card/ debit card/UPI/ saving or current account…), improved security (through encryption, multi factor authentication, sensitive data storage etc.), reward (cashback) programs etc.
It does not mean that these systems have no limitations; here are few of them, limited acceptability by merchant, no security guarantee in case of theft, multiple network failure points, hacking and phishing attacks. With continuous growth in transaction volumes of Digital wallets and mobile payment systems, fintech(s) are putting constant efforts in making these systems robust, scalable, secure and compliant.