Artificial intelligence (AI) is creating smart machines capable of performing tasks that typically require human intelligence. AI is becoming essential for all businesses that rely heavily on data- the most relevant example being the Banking and Securities industry.
Even with AI and ML’s emerging applications, some organizations have held back because of the seeming complexity. However, solutions are emerging to bridge the gap between traditional systems and next-generation technology by providing lucrative benefits to financial institutions.
Impact of AI on Banking Industry
According to the MIT Sloan Review, 85% of business decision-makers predict that AI will benefit businesses in the future. A few ways it will benefit are-
Fraud Detection & Protection
The banking industry is extremely vulnerable to scams and hacks, and fraud detection and mitigation are the banks’ topmost priority. AI is critical in decreasing fraudulent activites and reducing banking frauds. AI is well fitted for detecting fraud, with 63% of financial institutions saying that AI can prevent fraud before it happens. Through supervised machine learning, AI can utilize supervised and unsupervised learnings to determine if a transaction is fraudulent or not.
Data Encryption
IBM researchers have recently led significant breakthroughs to progress the reality of homomorphic encryption (HE), achieving a level of performance and accuracy for machine learning tasks. This has been validated against real financial data from a large banking and financial services institution in the Americas.
This research proves, HE can successfully be used to protect the privacy and confidentiality of data used in the creation of predictive models – theoretically freeing the bank to safely outsource sensitive data to a hybrid and/or public cloud for analysis with peace of mind.
Even with benefits, widespread implementation of technologies like AI and ML will not be devoid of challenges. Financial institutions will need to accept solutions that leverage emerging technologies like AI and ML that have shown great promise in predicting and mitigating frauds and reducing operating costs significantly.