A bank has three major operations — borrowing, lending and investing (treasury). All three can be managed by algorithms.

Bengaluru-based Archeron group, which offers solutions in artificial intelligence (AI) and quantum technologies, wants to open banks where all the three operations are fully managed by AI and run by quantum technologies. The group’s founder, Aviruk Chakraborty, is an adviser to the UAE government on AI. Chakraborty tells Quantum that the group will have five separate banks operating in different geographies by the end of the year, but none in India, because regulations do not allow it yet.

Automated lending

The ‘Ai Bank’ will be run by algorithms, which are step-by-step instructions given to computers.

Automating borrowing and treasury is not a big deal for AI-enabled computers to sift through data for the best option for borrowing or investing.

However, AI comes more into play in lending. Chakraborty says AI solutions are 97 per cent efficient in giving out loans — only 3 per cent turn out to be bad loans. Chakraborty is also the founder of CapitaWorld Platform Pvt Ltd, the Ahmedabad-based company that links banks and NBFCs (non-banking financial companies) with businesses and individuals, using analytics.

Emotion in the mix

But assessing a loan applicant doesn’t stop with analytics. Chakraborty speaks of ‘emotion quantification’ as an input in borrower assessment.

As the customer is speaking to a chatbot or an employee on the phone, a software is analysing his blood pressure — Chakraborty says it can be done — and stress in the voice. The idea is to figure out “which question gives him the maximum stress”. Archeron has developed algorithms for fraud detection, default probability prediction, credit score generator, automated background checks and a loan decision engine.

Price of loyalty

This way, the bank would have no front office and not too many people working in the back office. Cost of operation would therefore come down drastically and, consequently, so would the lending rates. If the lending rates are 200 basis points below the competition, customers will shift.

“The price of loyalty is 200 basis points,” says Chakraborty.

The first banks of the Archeron group are likely to come up in the UK, the UAE and Mauritius. They would have opened by now, but for the pandemic. Only the licences are awaited, everything else is ready, Chakraborty says.

The group is also on to acquiring two banks in the US, which again is only awaiting approvals.

Learning from other banks

But from where will the data come for analytics? Chakraborty says the AI solutions are being offered to various other banks in the world. As the solutions run there, they will also learn and become ‘wiser’. The banks won’t mind, because Archeron is not taking their data — only the AI is learning from it.

“What I am doing is inevitable, it will become the norm in the world,” Chakraborty says.

‘Quantum’ comes in for transfer of data. Here, Archeron will use quantum entanglement-based teleportation of data, which is absolutely safe. By the end of this year, the group will have its own constellation of ‘quantum communications satellites’, so that data transfer is unhackable.

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