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AIDA Technologies, a Singapore-based artificial intelligence startup, raised an undisclosed amount of funding in a Series A round from Mastercard, Kuok Ventures, and SGInnovate to expand in current markets and in North Asia.
AIDA provides AI-based solutions on loan and insurance management to financial services companies, specializing in detecting insurance fraud, improving underwriting, and accelerating the claim process.
“AI is being rapidly pushed by large amounts of venture capital and applied in many departments of finance,” Tim Sloane, director of Mercator Advisory Group’s Emerging Technologies Advisory Service, told Karma Network.
Big banks have already employed artificial intelligence in their operation, so they are aware of the existing technical challenges, explained Sloane. It makes sense for big banks to fund startups working on specific problems that they face.
“This further strengthens Mastercard’s AI-focused strategy,” said Rohit Chauhan, Mastercard’s AI Center & Cyber Platforms executive vice president. “It provides us with access to AIDA’s world-class AI platform and toolkit.”
Unlike traditional banking where human experts make decisions on loan lending and software runs pre-set instructions, the AI model is trained by sufficient data and mimics the human brain. Its neuro network operates in a non-linear fashion.
“We are at the beginning of a new industry and its impact is simply going to increase,” said Sloane, adding that adopting AI in banking will be faster than developing and implementing software due to its advanced technology.
There are generally two approaches taken by AI startups, Sloane added. The first one is to improve the fundamental technology, building a better neuro network. The second is to build a solution for a specific area by capturing vast amounts of data to best train its model.
The main challenge of AI banking is to make sure decisions are not biased, such as granting a loan on an applicant’s race. Scientists are aiming at building AI models that can explain how they make decisions.
Banks around the world are beefing up their AI technology. Israel’s Bank Hapoalim participated in a $30 million funding last summer for ThetaRay, another AI company. Sberbank, Russia’s largest financial institution, runs AI competitions to identity talent. In the U.S., Capital One doubles down on its “ethical AI system.” Numerous tech companies are working on AI financial solutions, including Fraugster on fraud detection and Clarity Money on financial advice.
Established in 2016, AIDA operates in Singapore, Malaysia, Thailand, Indonesia, India and Hong Kong. The funding will support AIDA’s “deepening penetration into existing markets and expansion into North Asia, especially Hong Kong and Japan”, said AIDA’s CEO, Tan Geok Leng.
Scarlett Kuang is a business reporter based in New York.