Banking and the Benefits of AI Technology
To say that the COVID-19 pandemic has changed the world dramatically would be at best an understatement. Every means of interacting, communicating and making transactions has been transformed. One transformation worth noting is the increased application of artificial intelligence (AI) in banking and financial services. In fact, it may be said that this crisis has inspired AI’s emerging role in banking…
Bank fraud is on the rise with the COVID-19 crisis.
Because of social distancing rules and other restrictions that have been put in place because of the pandemic, banking via digital has become a preferred option for many customers. More digital transactions, however, means the possibility for more occurrences of cyber-fraud. Lingjia Tang, writing for PaymentsJournal, cited findings conducted by LIMRA concluding that approximately 40-percent of financial service organizations have experienced increased incidents of fraudulent activity. And this increase began as the pandemic evolved. Scary, yet there is an answer: AI technology. AI technology can benefit banks and financial institutions in spotting and curbing cyber-fraud by building and maintaining user trust, the capacity for processing data for anti-money laundering, and aiding compliance operations for risk prevention.
Banks are taking a closer look at AI technology.
And forward-thinking bankers are taking note of the value of AI. Banking CIO Outlook recently summarized a report by the Economist Intelligence Unit (EIU), noting that 77 percent of banking executives consider AI technology to be a worthwhile and necessary investment. This report even projects that banks choosing to invest in AI are more likely to succeed than those that do not—particularly in light of the current pandemic. This crisis has prompted banks to examine and explore technologies to help adapt to changing customer needs, not to mention keeping up with competitors. Due to governance obstacles such as “black box” risk and data bias, however, simply incorporating AI technology is not so easy. The EIU clarified that banks wishing to use AI must apply standards of regulatory guidance. These standards include:
- Ethics: Data sources that are applied to the many different AI case studies should be examined closely and regularly to ensure this data stays representative and not biased.
- Accountability: All data taking steps must be documented in the event an explanation is needed for individuals who might be affected or impacted by particular AI-related decisions.
- Quality of data and expertise: These may seem obvious, but governance standards need to be implemented throughout banking systems to maintain data accuracy. Complementing this, any professional applying and monitoring AI technology must be fully qualified and have the appropriate skillset.
The EGC Group is keeping up with the changes going on in the world of banking and finance. If you have any questions about how we can help your financial institution stay successful, reach out to us today.