The venture capitalists' most favourite tech innovation, fintech has witnessed rapid growth in a short period of time, amongst others. It's potential to enhance banking and financial services to customers has urged the country to embrace it widely, thus making India rank highest in fintech adoption across the globe on par with China. Fintech adoption has drastically altered the work nature of various services such as payments, investments, consumer finance, cryptocurrencies and more. Thus, the transaction value of Indian fintech market is expected to elevate from $65 billion in 2019 to $140 billion by 2023 at a CAGR of 20 percent.

Fintech companies majorly depend on AI, machine learning, predictive analytics and data science to provide superior services. Let us see how fintech is utilizing data science to enhance its services.

Analyses Risk Factors

Analyzing and evaluating risk is crucial in fintech firms. Risk evaluation is part of almost every service in fintech, starting from online working capital loans to making investment decisions. Thus, data science assist fintechs to develop accurate credit risk decision processes, which is next to impossible in regular financial institutes. Also, data science enables online capital lenders and others to precisely estimate the creditworthiness of people by evaluating data points.

Detects & Prevents Fraud

Fraud is one of the major challenges that fintech face right now. Data science helps fintech firms in detecting and preventing fraudulent activities and it also has the potential to monitor transactions in real-time and highlight the ones that fall outside the average. This feature of data science is the most significant tool to fight fraud. With the increase in e-commerce, fraud detection and prior warning systems have witnessed fast-paced growth.

Asset Management

Data science has granted fintech the authority to crunch a huge amount of data to create asset management models to obtain higher risk-adjusted returns for their customers. The introduction of data science into fintech has created Robo-advisors, which has no space for emotional inherent in the decision-making process. The process initiates by gathering client information through an online survey. The information collected includes clients' financial status, risk capacity and future financial interests and more. The client would be offered financial advice based on the information gathered. Also, it considers historical trends and data points to make a proper asset allocation decisions.

In short, data science could be termed as the backbone of fintech. Fintech firms solely rely on data science to make decisions in every service it offers to its customers. Hence, it is evident that data science has truly revolutionized fintech firms.   

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