Financial Institutions are increasingly using AI in different applications across the Finance Sector Including amongst other to detect fraud, manage risks, and enhance data quality & accuracy, regulatory compliance. However the use of Artificial Intelligence in the industry is still in its infancy and very far from becoming mainstream.According to Anil Chakravarthy, CEO, Informatica- one of the AI predictions for 2018 is that; Data is the foundation of digital transformation initiatives and we are sure to see more major brands across both business and consumer industries leveraging AI -driven metadata in the coming year. This data about data, unified across the enterprise, will enable organizations to start realizing AI’s full potential.
By applying machine learning and AI to metadata across the enterprise, businesses will be able to more quickly and accurately capture unprecedented insights and make intelligent predictions based on data – including things they never thought to consider. This will fuel innovation, create better customer experiences, enhance security of sensitive information, and improve overall business outcome. Fraud detectionAs the use of e-commerce is increasing, so is online fraud. Getting a deposit of or transferring a larger amount than normal from a person’s bank account can be a sign of potential fraud.
The Artificial Intelligence should be able to detect if this is a real threat by looking at the customer history and transaction trends. However this could lead to false declines or wrong rejecting of legitimate transactions; which could then result in loss of customers and revenue for businesses. AI is of great use in detecting fraud due to their ability to read data that can take months for a forensic personnel to investigate. South African banks have moved to using individual’s biometric information to curb fraudulent transactions. The Department of Home affairs is leading the way in biometric authentication.
Risk Management and Regulatory ComplianceAs financial Institutions continually improve their Risk Management & Compliance processes and systems, many are putting Artificial Intelligence to increase their current processes. The use of AI in the Risk Management will greatly impact the way Financial Institutions manage their risk. The focus for risk managers will shift from operations and be more on the analytics. From the Regulatory point of view, the Financial Institutions are under pressure as there are more Compliance requirements both locally and Internationally that has to be adhered to. This includes South African Revenue Services, The South African Reserve Bank, National Credit Act and the like. Human beings are creators of habit and they could miss some of the requirements which may result to non compliance.
Overwhelmed by demanding new regulations, the financial institutions are using technology to provide regulators with the data they need, cheap, faster and more securely than. Enhances data accuracy & qualityData is a very vital piece of the business success equation. Businesses should maintain and ensure data accuracy, consistency and reliability.
Inaccuracy and duplication of data are currently major business problems for an organisation wanting to automate its processes. This is one problem faced by the Utility companies in the country. Duplication of customer information that may result in customer receiving 2 or more utility bills for the same reporting period. This would lead to customer dissatisfaction, cause discrepancies on their monthly recording, and an imbalance between their ledger account and bank balance. Critical decisions in fields like finance cannot afford to be marred by the inaccuracy involved in human decisions. AI technologies are enabling processes like data entry to become faster, more responsive, and more secure.
It automates processes and reduces the potential for human error in data entry processes by effectively managing a typically repetitive task.Looking at the evolution in transportation, from using horse carriages to motors cars and airplanes. I would conclude that AI is there to bring about efficiency and effectiveness in the finance sector.