11/13/2019
The Growing Impact of AI in Financial Services - Usm systems - Medium
The Growing Impact of AI in Financial Services Usm systems Nov 13 ¡ 4 min read
The rise of AI in the financial industry proves how quickly it’s changing the business landscape even in traditionally conservative areas. Artificial intelligence (AI) is transforming organizations, driving growth and innovation and changing the way they think about integrating and analyzing data.
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While there are regulatory, ethical and privacy concerns surrounding AI’s applications, for financial institutions (FIs) there are myriad advantages. According to Intertrust, 94 percent of UK-based financial services industry decision-makers believe that AI has the https://medium.com/@fugenxmobileapp/the-growing-impact-of-ai-in-financial-services-94d2847353c9
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11/13/2019
The Growing Impact of AI in Financial Services - Usm systems - Medium
greatest potential to revolutionize the sector over the next five years, more so than blockchain and the Internet of Things (IoT), for example. Among the key drivers for adoption of AI and machine learning (ML) is the level of insight it offers into customers, markets and competitors, as well as the cost and time advantages of automating processes. According to the portal, 120 billion digital transactions are made each year in the European Union (EU) alone, and that number is set to increase. AI can also reduce risk and detect anomalies and variables in real-time, enabling FIs to identify fraudulent transactions, for example. Through its speed, AI also enhances efficiency and productivity for the financial sector. As it continues to develop, it can identify patterns for FIs to offer bespoke services to their customers. The financial upside of AI integration is also compelling. According to Payments, banks that invest in AI could see their revenue increase by 34 percent by 2022. AI integration could cut costs and increase productivity across the industry by $1 trillion by 2030. In light of these forecasts, it is unsurprising that FIs are increasing their investments in the tech space. According to PwC, at the end of 2017, 52 percent of banks reported making substantial investments in AI and 66 percent said they planned to do so by the end of 2020. “As with all new technology, there will be hurdles to overcome as AI adoption becomes more widespread. However, AI tools can generate significant value for banks and FIs, if these risks can be mitigated.” “We see AI-driven solutions becoming more influential in the financial services industry,” says Mark Adair, a partner at Mason Hayes & Curran. “This transformative technology is already fairly widespread in its various forms. It promises to change how businesses work and improve the lives of customers. Opportunities include the ability to automate back-office functions, like automated credit assessments and fraud prevention. The efficiencies and potential savings for financial services companies are obvious. AI can also improve the end-customer experience, for example through intelligent ‘chatbot’ software in online banking apps.”
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11/13/2019
The Growing Impact of AI in Financial Services - Usm systems - Medium
As AI matures, however, it will demand additional regulatory oversight. “Regulators are paying close attention to this developing technology and the risks it poses,” says Mr Adair. “AI will only come to widespread acceptance in the market if lawmakers and participants trust it in the context of the legal and ethical questions it raises.” FIs need to navigate a range of legal and regulatory considerations when deploying AI tools. “Businesses will need to identify the existing regulatory framework applicable to the relevant service and determine how the use of AI may achieve or hinder compliance,” says Peter Chapman, a partner at Clifford Chance LLP. “Businesses will need to put controls in place to ensure the data is appropriately obtained and processed, that datasets are not biased or that at least bias is accounted for. A further, but equally important, the challenge will be to ensure that AI processes and outcomes are transparent and explicable to the customer, senior management and compliance within the bank and, if asked, regulators.” From a regulatory perspective, there will be a shift in the governance of AI in the financial services space. The UK government, for example, is establishing an industry-led AI Council, a new government office for AI and a new Centre for Data Ethics and Innovation (CDEI), to strengthen the existing governance landscape and ensure ethical and innovative uses of data and AI. “We have already begun to see regulatory scrutiny around firms’ use of AI and we expect to see increasing standalone regulation of AI at UK and international level in 2019 and beyond,” says Mr. Chapman. “Ethical questions are also crucial and the challenge for businesses now is to identify a set of ethical standards that can apply practically across products and geographies and evolve as the technology does.” As with all new technology, there will be hurdles to overcome as AI adoption becomes more widespread. However, AI tools can generate significant value for banks and FIs, if these risks can be mitigated. Want to know more AI services then have a free visit for USM systems
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