This Article has been written by Ms. Khushboo Sharma, a 5th year Law-student of Vivekananda Institute of Professional Studies, Delhi.

Abstract

Fintech and Artificial Intelligence are at a budding stage in India. They are both progressively growing in the Indian economy and are observed to make our work easier for good. The use of AI in fintech has been beneficial so far but one must keep in mind the intricacies of AI. The Intellectual property rights, in general, have been seen to get affected/ infringed by the use of AI. In this article, we will be discussing the use of Artificial Intelligence in Fintech and the possible implications on the Intellectual property rights.

Keywords: Intellectual property Rights, Fintech, Artificial Intelligence, Implication, Finance sector, banks.

Introduction

FinTech refers to the Technology used in the financial sector. It could mean anything that involves finance and technology together, for example, mobile banking apps, stock trading, peer to peer lending, blockchain, cryptocurrency, etc. The FinTech includes a wide array of other similar functions which is why it also includes the use of Artificial Intelligence or AI within its scope.

Fintech firms are engaged in disintermediation (basically aimed at removing middlemen) via innovation through the use of AI, Machine Learning, Big Data, block-chain technology and basically everything that could be possible through the internet. Since, it involves various concepts at various stages, the personal information of the customers of such technology become massive which is almost impossible to be arranged at a man’s level, hence, the AI is used to gather, calculate or process such information. However, as the AI is recent and at an initial developing stage, the chances of leaking of the information are many which could have a detrimental impact on the Intellectual Property Rights of the customers. In this Article we are going to discuss the same as to how the relation between Fintech and Artificial Intelligence can create intellectual property implications in India.

ARTIFICIAL INTELLIGENCE AND ITS USE IN FINTECH

What is Artificial Intelligence (AI)?

The artificial intelligence is considered as a computer service that has the capability to answer the questions that a human may prompt to it. Most often, the Artificial intelligence makes use of the information made available to it by its prompter or it may simply take the help of the content available online. The use of Artificial intelligence has no bar and is used in variety of fields such as education, virtual assistance like Siri, Alexa, Google. AI is also used in self-driving cars, medical diagnosis and detection of fraud in the financial sector.

AI in Fintech

The use of Artificial Intelligence in the field of Fintech is almost unlimited. If we talk about banking as financial sector, it uses Artificial Intelligence in Algorithmic trading in order to make trade decisions and placing trade orders, furthermore, it is also used in understanding changing market conditions and changing strategy relating to trade simultaneously. AI also helps in detection of fraud by finding anomalies and flagging them making it easier to detect the fraud. In addition to this, it helps in transactions that occur through the internet.

In India, like any other country, the use of Artificial intelligence is growing where we can see companies leveraging AI technologies to enhance efficiency and accuracy along with good customer experience.

AREAS IN WHICH AI IS USED

• Enriched customer experience

The use of AI in fintech has proved to be an effective tool for improving customer experiences. The Fintech company’s sophisticated chatbots and virtual assistants offer instant, personalized customer support, that aids in making interactions between the company and the individual seamless, convenient and possible anytime. Such AI-powered assistants are able understand customer needs and offer tailored solutions for their queries. Furthermore, it can guide them through the lending and other processes effortlessly. 

Such technological advancements have made the traditional discussions simple and quick and hence, it contributes to improved customer satisfaction.

• Data-driven Decision Making

The Artificial Intelligence has helped in transforming traditional lending through data-driven decision making. The AI tools can process and analyse extensive data sets presented to them that allows the financial institutions to improve their lending strategies and create innovative financial products and services. The AI’s predictive analytics capabilities may help lenders make approximate credit assessments as well.

• Detection of Anomalies:

The AI also helps detecting anomalies in the computer programmes or softwares. For example, in case where a bank customer applies for a loan but due to any reason, he submitted multiple applications. In this case, the Artificial intelligence will detect the ‘unusual’ and won’t let him proceed until the anomaly so created is resolved.  

• Driving Financial Inclusion:

It is obvious that traditional lending practices had often excluded individuals who did not have a formal credit history. However, the new startups with their AI-driven solutions showed the use of alternative data sources, much like social media or through mobile usage patterns, to assess the creditworthiness of the customer. By leveraging AI, financial institutions can promote their services to the underbanked and unbanked, encouraging financial inclusivity on a larger scale.

• Detecting bank frauds

The AI can also be used to analyse data and detect suspicious transactions that may indicate towards potential frauds. However, an action is taken only after human staff goes through such transaction. It will help in time saving and prevention from potential threats.

• Enhanced safety

Ever wondered why Paytm and Google Pay ask for your fingerprints? The artificial intelligence used in these apps and your screen lock help offer you added security. It identifies the finger impression and allows you to access the app knowing that only the authorised person has the access to your personal information.

Intellectual Property and Artificial Intelligence in Fintech

As we have discussed the use of Artificial intelligence in Fintech, we have come to know that the field of Fintech has good prospects of development if AI is used. Nevertheless, Artificial Intelligence is still unregulated and due to this reason, it can negatively impact the Intellectual Property rights of the people.

Implications of AI on IPR

The implication of the Artificial intelligence on Intellectual property rights are far-reaching and as of now we do not have any clear answers on the same. These issues will continue to exist till the time, a comprehensive regulation deal with them.

The first and the foremost issue in the implication pertains to whether AI can be considered as an Inventor of any work it creates. If it is so, then it had to said that AI has the right to sue in case of infringement. If the AI is not considered to be the inventor, then the person who prompts information to it will be said to be the inventor, however, it will still be a issue as the AI can write anything and the person have to be made liable.

Further, the applicability of the concept of novelty and non-obviousness is complex in AI generated works. It is due to the fact that novelty is something that is understood as a unique invention that is not known to a skilled person before. Though, it is still unclear as to how such concepts would be made applicable on to the works generated by the AI tools. 

Benefits of Artificial Intelligence in Intellectual Property Rights

1. Today, the artificial intelligence is used widely in the creation of Intellectual Property. It enables the generation of automated content across different domains like- art, literature, music and scientific research.
2. In the field of fintech, the Artificial Intelligence has the algorithms that are capable of analysing large data-sets and create designs, invention which leads to the creation of new IP assets.
3. AI techniques, for e.g., Machine learning can help compare patent claims, trademarks and copyrighted works which ultimately aids in identifying possible IP infringements.
4. Artificial intelligence is considered to be a valuable facet of Intellectual Property in itself. The work generated by AI can also be protected and patented and also can be complied with laws based on copyrights of AI for its protection.
5. The AI can also help identify any possible infringement of IPR across all the online platforms.

Possible shortcomings of AI in protection of IPR:

1. The AI based application uses personal data of the user to identify and sort their requirements, however, it can be catastrophic in case this information gets stolen or leaked.
2. No matter how significant Artificial Intelligence becomes for the fintech sector, it cannot be said that whatever work is generated by AI has to be correct and legal. 
3. There is no legislation that regulates AI in India and therefore, it can become difficult to attribute the works so generated by AI to a living person or a software.
4. As the AI chat bots use information available online, it can also infringe on the copyright or right on design of someone else.
5. AI may make it easier to infringe upon patents by finding process and copying patented inventions.
6. Determination of copyright can become excessively difficult.
7. Due to wrong inputs, the answer or desired results may be false.

The use of Artificial Intelligence has indeed immensely aided in expansion of fintech services. Development of Algorithms, chat-bots and coding has become relatively easier and it not only reduces the burden of the companies but also makes it easier for the customer to get the required information on tips in no time. It also is cost effective to the customer/ interested stakeholders as it becomes easier to address their doubts online without having to travel to & fro to the companies. 

The introduction of Artificial Intelligence as without a doubt revolutionized not only the fintech sector but also multiple sectors that exist today. Although, every coin has two sides, and here the negative implications of the AI in IPR is highlighted. We must understand that AI is not perfect and it is yet to develop further. With the right usage and regulation of Artificial Intelligence, the Intellectual property rights can also be protected. Finally, is can be said that there is a special need for a legislation on the Artificial Intelligence today which will make the regulation of Fintech a bit easier.

Conclusion

It is no doubt that the use of Artificial intelligence has made our lives easier. We do not have to search through the internet for our queries as personalised answers are made available quickly. In Fintech, for the development of application and software, there is a need for computer codes, algorithms, APIs, etc. It is observed that Artificial Intelligence and chatbots like Google Bard and Chat GPT are also sufficient in coding. However, we need to understand that as the development of Artificial Intelligence is a new concept, we must use it wisely. As discussed above, a possibility of IPR infringement on the works of other can be ruled out which is obviously not desired when we make efforts in protecting the creativity and innovation of others. Hence, to conclude we must say that even though AI has proved to be a boon for some it can be a bane for others and a diligent approach is required while making the use of such Artificial Intelligence tools in the field of Fintech so that there is no violation or infringement posed on the works/ creation of others.

References

1. https://indiaai.gov.in/article/analyzing-how-recent-ai-developments-impact-fintech —-Anjali Raja
2. FinTech, Artificial Intelligence and the Law: Regulation and Crime Prevention (by Alison Lui, Nicholas Ryder
3. https://www.linkedin.com/pulse/unveiling-promising-prospects-ai-indias-fintech-industry-gandhi/ (by Sanjeev Kumar Gandhi)
4. https://www.mondaq.com/india/fin-tech/1369804/fintech-laws-in-india-understanding-the-regulatory-regime#:~:text=The%20Companies%20Act%2C%202013%3A%20Fintech,other%20business%20in%20the%20country.