From the fraud prevention to driverless cars that navigate busy streets with ease, 2019 brought a dazzling array of artificial intelligence (AI) innovations. In 2020, AI is set to move towards collaboration in different sectors.
Recently at CES 2020, we have reached the point, where AI has proven that it’s beyond just ideas and is useful. Samsung’s SelfieType and rolling robot called Ballie that runs your smart home are prominent examples of AI’s utilization and prove that big tech companies are relying on AI for future advancements.
In fraud prevention, deep learning- a domain of machine learning that teaches computers to learn by examples and previous experiences - is being used to spot frauds with great accuracy. However, to fully unleash the power of AI in fraud prevention requires access to very large scale data. From data, AI algorithms will be able to derive highly accurate predictions, risk management, and ongoing transaction monitoring.
This means that businesses and stakeholders must commit to adopting AI-driven fraud prevention solutions to gain meaningful results. It also obliges collaboration across the finance and tech sectors, to ensure the integrity of financial institutes is upheld.
There are three ways AI can drive accelerated presence in the financial sector in 2020.
Enhanced Risk Identification
In the past, payers and providers viewed sharing data between each other with great skepticism, concerned that it will pose a very imminent threat. However, in today’s data-driven world, they simply can’t optimize their businesses without proper data and AI-driven technologies.
This is specifically true when it comes to risk management: separating customers into high-risk, low-risk and potential-risk categories based on analysis of financial data and risk associated with dealing person. While risk identification isn’t a new phenomenon, deep learning boosts risk identification, by combining data from multiple sources to identify transactions that could be a potential risk, in real-time.
Greater Agility in Fraud Prevention
Instances of credit card and identity theft fraud are becoming increasingly complex, with $24.26 billion fraud in 2018 only. Artificial intelligence opens the door not just to detect fraudsters, but also adapt to the changing nature of fraud in real-time.
In the coming years, AI is expected to boost fraud detection capabilities among financial institutes, banks, foreign exchange, and others. With increasing complexity and size of cyberattacks at a fast pace, AI frameworks will keep on playing an important role in fraud prevention. More organisations are anticipated to employ machine learning and AI for preventing data breaches as well.
Automating Investment Banking
While AI hasn’t dramatically reshaped the finance sector but it has truly revolutionised investment banking. Investment banks are typically made up of three operating arms: Sales& Trading, Research, and Corporate Finance. When AI fully takes over this sector, it will impact all three areas.
In Sales&Trading section, soon the AI-powered digital assistants will replace the human representatives. Natural Language Processing (the ability of computers to interpret human languages) is playing a vital role in this transformation. This transformation has already started and in fact, there has been a 20-30% reduction in front sales offices. In the coming years, AI is expected to fully automate this sector.
Be Ready for Prime Time
For the finance sector, AI is no longer a future state disruptor. It is transforming the banking sector. It’s a powerful tool for reinventing banking and financial services. AI is a necessity for protecting organisations from fraud and enhancing the workflow through automation. AI is ready to become an integral part of almost every major process in the industry. Within the next few years, we will longer be pointing it out as an innovative technology, instead, it will be a fundamental component of the finance sector.