It’s a problem the industry has had to deal with since it began, but thanks to artificial intelligence (AI) and machine learning (ML) it could soon come to an end.
The International Data Corporation (IDC) estimated that around $17 billion was spent on AI for businesses, including big data and analytics solutions, in 2016 and that figure will simply get bigger as time goes by.
Most businesses today can’t survive without the use of AI in one form or another. Banks are using machine learning techniques in which to analyze their data, and in other ways which will ultimately change the banking business as we know it.
Results from a recent Baker McKenzie survey revealed that nearly half (49%) of all senior executives of financial firms participating in the survey expected AI to be used within their company’s risk assessment within the next three years.
Nearly a third (29%) said that they believed their firms will use AI to prevent money laundering and learn more about their clients. While over a quarter (26%) said AI will help in compliance and regulatory issues.
Financial crime is one of the most difficult things to deal with within the industry, even with the likes of machine learning. However, AI can help prevent money laundering in many ways. It can better distinguish between real cases and false positives.
“We are already experiencing use-cases of AI and advanced analytics in the anti-money laundering function where technology is able to bring false positives down, allowing focused approaches to risk detection and avoidance,” said Rahul Singh, president of financial services at HCL Technologies.
As well as money laundering, machine learning is useful for preventing consumer fraud by better understanding transactions and customer’s behavior. In 2016 the Bangladesh Central Bank was the target of a huge cyberattack and nearly $81 million was stolen before the hackers were caught.
If AI would have been in place, any anomalies would have been flagged up long before the criminals got away with that much.
It’s certainly been a wake-up call for many financial businesses within the industry. More and more are beginning to integrate the likes of AI in the form of machine learning, in an attempt to not only protect their customers but to improve their efficiency too.
But, let’s not forget machine learning isn’t without its own flaws. One issue is that it will need regulating, and at the moment it’s still quite early days for the technology. But, as improvements are made, and more business adopts the technology the use of AI will continue to increase steadily for the foreseeable future.