Wonders of Artificial Intelligence in Finance
The Finance Industry is the backbone of the country’s economy. Inflation, crisis, economic depression, cash flow deficit, etc are situations in which this industry assists other sectors and is the true indicator of the economy. Needless to say, this puts quite pressure on the financial institutions to be easily accessible, non-corrupted and secured. But today, humans are the weakest link in any security system. As this industry prominently depends on humans, this puts the integrity of their security system in danger. Thousands of cases of fraud and digital theft are reported every year. In conditions like these, there was an urgent need to have a solution.
Being a disruptive technology, Artificial Intelligence has broken a lot of myths and has proven to be the strongest counterpart of finance. With the digital presence increasing rapidly during the time of the pandemic, the number of online or digital banking and finance-related crimes has increased significantly as well. Artificial Intelligence is playing a major role in combating these crimes and also keeping a vigilant watch for Anti Money Laundering protocols.
Artificial Intelligence and Data
Financial Institutions generate an enormous amount of data on a daily basis. They hold very sensitive and personal data of people, breaching of which could have catastrophic repercussions on customers both on professional and personal levels. But today, most of this data is stored nowadays using a cloud service provider. Cloud security is strong as it is and uses multiple levels of encryption to keep the data safe. It also uses the Hierarchical model of authenticity which means only certified people will have access to certain information.
Now, AI has a giant roulette to play here. Data is even a bigger asset to mankind in the 21st century than money. Artificial Intelligence is used to track, monitor, and learn from these gigantic amounts of data. Machine Learning models follow audit trails, transaction patterns, and histories, etc, and learn how to detect unusual activities automatically. The data is processed to make algorithms to learn to prevent further crimes. The AI models are taught to have automatic Intrusion Detection and Intrusion Prevention Systems. If there is any unusual activity in someone’s bank account or there is a suspicious money transfer, the respective bank and customer are notified automatically with the help of Artificial Intelligence.
AI in Fraud Protection
Identity thefts and money laundering frauds have for long been a growing concern for the finance industry. With the advent of Artificial Intelligence, the systems have now robust frameworks that are used to combat these types of frauds. AI models can pick up unapproved transactions and link them to credit cards and overseas bank accounts. This helps to expose money laundering or terrorist activity chains. Most of the money laundered happens through shell companies. AI locates these companies and their bank details through the audit and transaction trails of suspicious transactions.
Digital KYC
Another distinctive technology that has come up in the last few years is the concept of digital KYC. The lockdown restrictions have bolstered the concept of using digital technology to conduct the KYC verification process. In digital KYC, the institutions use a webcam that enables live feed verification to carry out the identification process. Most banks now use online KYC as a form of verification during customer onboarding to make sure their customers are carrying low risks and have no connection with any money laundering scandals.
Artificial Intelligence not only does a thorough check of a possible customer’s financial records but also links it with other transactions and purchases to make sure they are not associated with illegal activities. Moreover, it also provides ways to detect identity theft during the verification process using Artificial Intelligence enabled blink test from the live feed during the digital KYC process.
AI revolutionizing the API’s
Most banks and financial institutions customized their APIs and website for their customers to ease the process of internet and mobile banking. Right from account creation, to mutual funds investment and FD can be done over the internet, APIs rule out the need for huge customer service staff. The Customer Service resources are now being replaced with AI bots who communicate with customers. They assist them as and when required. These bots have pre-existing questions from which the inquiring customer gets an option to relate. The learning models of these bots keep updating and framing answers from the frequently asked questions that are otherwise not in their designated question banks. They also refer to the correct person in charge if they are unable to fix the problem or if the customer needs more direct assistance.
Now, it is safe to say that technology plays a very important part in our lives. We are wholly intertwined and dependent on technology at every minute of the day. However, it is not only mankind that has been affected by the technologies, a lot of industries who otherwise worked on a manual model have turned towards digitizations. The outbreak of the COVID19 pandemic has only sped things up.
