After the global financial crisis of 2007 to 2009, which many economists consider as the worst crisis to hit the industry since the Great Depression, the financial sector has been under great pressure to improve regulations and other security measures, in order to protect both the system itself and the people who shoulder the brunt of the effects whenever such a crisis occurs.
While it may seem like an uphill battle, technology has helped the finance industry address security issues across various services. One such technology is artificial intelligence or AI. While some visionaries like Elon Musk have expressed reservations about using AI, calling it an “existential threat,” AI is hardly the enemy that some might imagine it to be. In fact, the smart application of AI has already helped banks and other financial services organizations address fight a host of problems, ranging from identity theft and hacking.
Here are just a few ways that AI is making financial services safer.
Dealing with billions of dollars worth of money every single day is bound to generate huge volumes of daya. With the help of AI, banks and other financial services organizations like insurance agencies can generate accurate financial reports and identify market trends with a higher level of accuracy, allowing them to adapt to any changes accordingly. AI financial advisors are also being explored, which are geared toward giving more accurate financial guidance based on consumer profiles that have similarly been collected and classified by AI solutions.
Using AI also means being able to manage data more effectively. Many financial institutions default to applying an analytic approach to data; however, if they are dealing with irrelevant information then they would not get their desired results. AI solutions can help establish accurate data management, resulting in higher data quality and therefore better analytics.
Preemptive Action Against Money Laundering
One of the biggest issues that the financial industry has ever faced is money laundering, which has deep ties to other crimes like terrorism. Therefore, removing these criminals’ source of funds — which filter in through different money laundering methods — can help drastically reduce the occurrences of such illegal activities.
AML artificial intelligence solutions can help simulate situations in which fraud, money laundering, and other cyber attacks may occur, creating a more proactive approach in dealing with these crimes. Using these simulations, financial organizations can create more stringent security measures to prevent security breaches. AI solutions can also increase operational efficiency by separating scenarios based on their level of urgency, or whether or not they need to be investigated at all. This helps not only with the reduction of false positives, but also with the better allocation of law enforcement personnel.
Finally, AI solutions can also be used for oversight, ensuring that all security measures are in place, and government regulations and policies are being followed before any financial services are delivered or even designed.
Many financial institutions now employ AI solutions and allied services for the security of their online authentication features. These don’t only allow for real-time verification of identities, thus reducing the incidences of identity theft, but also for the detection of possible patterns that may be indicative of fraudulent activities.
AI solutions are also being used for research, as well as the development and actual production services that are focused on improving customer experience and security. And while automation often leads to robotic and impersonal interactions, AI can actually be programmed to provide empathetic and personalized advice.
Artificial intelligence may sound like something that is only applicable to industries like computer and information technology or engineering, but the fact of the matter is that with proper research and implementation, any industry can benefit from AI. With regards to the financial industry, AI is most valuable in handling and interpreting data, detecting patterns, and streamlining operations, in order to safeguard not just monetary investments but more importantly, the people who are the main stakeholders in every tiny movement in the financial sector.