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Financial services underestimate the power of AI



Ivo Gueorguiev, Co-Founder and Executive Chairman of Paynetics


AI could rewrite the rulebook for financial services. According to Google, if Britain invests in research and development, enhances its computing capacity, and improves digital skills, AI can boost the economy by £400 billion. The possibilities of AI in finance are limitless. Its exceptional ability to process vast amounts of data, personalise customer relationships, combat fraud, and streamline operational processes will undoubtedly reshape the industry.

However, as the finance sector adopts AI, it must carefully strike a balance between innovation, ethics, and data privacy. The responsible deployment of this technology is crucial to achieve sustainable transformation and ensure fairness, transparency, and accountability. These principles should guide every aspect of AI implementation.

AI: A Major Player in Product Development

Artificial intelligence has been used in the financial industry longer than one might think. James Simons’ quantitative investment firm Renaissance Technologies was founded in 1982 and developed systems to solve problems and answer questions in a set context. With the increase in computer processing power and the birth of Deep Learning, we now have AI use cases ranging from insurance underwriting to loan decisions and fraud prevention.

Ivo Gueorguiev

AI enables insurance providers to create bespoke customer pricing based on travel data analysis. The customer provides details about their family, health and plans and can secure a lower premium as a result. In the future, the financial services industry will see a similar application in mortgage or life insurance eligibility assessments, which will streamline service operations and speed up application processing for the consumer.

These new products and services are powered by the ability of AI to analyse vast datasets and extract actionable insights, in addition to automating traditionally manual processes and improving overall efficiency. Its ability to take over repetitive and even slightly generative tasks substantially reduces cost. It’s no wonder that all major players in the financial services space are launching initiatives to that effect.

Sophisticated Customer Service

Another way AI is transforming financial services is through customer engagement. With the FCA’s consumer duty rules coming into force in the UK at the end of July, exploring these applications is more important than ever.

AI-powered chatbots, virtual assistants, and voice recognition technologies provide instant, more accessible customer support and allow financial institutions to connect with them across multiple channels. The growth of sophisticated customer service tools may help drive growth in other areas. For example, customers may be more willing to embrace new technology, such as open banking, if adoption friction reduces and they know they have immediate access to complete guidance.

For example, AI has upgraded robotic advisors. Although these have been around for a while, AI has opened new opportunities for customer engagement. For example, personalised investment recommendations illustrate the ability of AI to analyse data from cards, bank accounts and payment systems to deliver a superior user experience.

The Transformation of Fraud Management

As illustrated by Google and HSBC, AI has significant potential in combating financial crime and fraud. In the UK, more than £1.2 billion of fraud was stolen in 2022, and next year rules will require UK banks to reimburse fraud victims.

AI in fraud detection was explored as far back as the 1990s when the FinCEN Artificial Intelligence System (FAIS) reviewed and identified potential money laundering incidents. Over two years, it reviewed over 200,000 weekly transactions and flagged 400 potential incidents worth approximately $1 billion. Nowadays, the tech that can detect and even predict financial crime is of serious interest to banks.

Modern AI works on the same principle, using algorithms to analyse vast amounts of data in real time, identify patterns, detect suspicious anomalies and predict fraud. Its ability to create more sophisticated rules and look for patterns instead of a simple rule-based system increases accuracy and reduces false positives. During their trial with Google, HSBC saw a 60% reduction in false positives and increased positive alerts by two to four times.

Embracing AI Adoption at Scale

Widespread AI adoption holds significant implications for the sector as a whole.

Professionals will witness a change in learning, development, and skills as AI paves the way for a new, enhanced way of working. Initially, AI will allow employees to focus on the most critical tasks while AI addresses recurring situations. In financial fraud monitoring, the most complex cases will require human intervention to talk directly to end-users and retailers. However, AI can sift through thousands of transactions to determine where complex fraud could occur and pull together all the relevant data before handing it to a human expert for deeper analysis and action.

The evolution of legislation also becomes crucial to keep pace with embracing AI at scale. Regulatory bodies recognise the need for updated frameworks that govern AI adoption in financial services. Adapting to these changes will be essential to ensure responsible and ethical implementation while fostering innovation and growth within the industry.

AI introduces a power dynamic between traditional banks and fintech companies. How traditional banks leverage their established legacy will determine their ability to regain market share. However, slow adoption could impact things like customer experience and future positioning. Careful strategic consideration will determine the players who thrive in this new AI-powered landscape and which risks falling behind.

Ethical Boundaries and Protecting Data Privacy

Ethics takes centre stage for AI in the financial services industry. AI can introduce bias based on the data it is trained on, which can amplify discrimination rather than eliminate it. Allowing AI discrimination to go unchecked is morally problematic and can go against compliance requirements.

However, regulating bias is not the sole concern that the finance industry should address. It is not uncommon for companies to repurpose data for uses beyond its original intent. In the era of AI, financial institutions must ensure that the integration of this technology does not compromise data protection and privacy standards. As they embrace AI and its lightning-fast data processing capabilities, institutions must diligently comply with the latest regulations to safeguard their customers’ information.

By staying vigilant and proactively addressing these ethical and data privacy considerations, the financial services industry can leverage the benefits of AI and uphold essential principles. This ensures responsible and secure implementation is addressed when looking into transformative technology.

Revolutionising Financial Services with AI

AI will revolutionise the financial services industry and rewrite the operational rulebook. Using AI in product development, customer communication, and fraud management means financial institutions unlock unparalleled growth and enhance customer satisfaction.

As AI reshapes the sector, prioritising ethical considerations and data privacy safeguards becomes crucial. Ensuring responsible and accountable deployment of this transformative technology is vital. Embracing AI while upholding ethical standards will pave the way for a thriving future for financial services in a digitally enabled world.


How technology can help win the war on financial crime




By Andrew Doyle, CEO of AML compliance software, NorthRow


Financial crime is on the rise and the stats are alarming. In the UK alone, 64 percent of businesses (according to data from the Global Economic Crime Survey) have experienced fraud, corruption or other incidents of financial crime within the last 24 months, while ONS stats show there were 3.7 million incidents of fraud in England and Wales in the year ending December 2022.

So it’s no surprise that financial institutions and other regulated firms are under increasing pressure from regulators (and the ever-evolving legislation they must adhere to) in the battle against dirty money. Regulators are imposing crippling fines for any compliance breaches, not to mention the significant reputational damage that comes with non-compliance.

Historically, financial firms have employed large numbers of staff to combat money laundering, but regulators are now expecting to see digital solutions in place to counter the risk of financial fraud, and with good reason. Technology can be the deciding factor in the war on financial crime and here’s why:

Better risk detection

Technology platforms can analyse historical data to predict potential incidents of money laundering, enabling organisations to take preventive measures, while also identifying unusual patterns or changes in customer risk profiles, which may also indicate suspicious activity.

Advanced analytics can help companies identify complex patterns across large datasets, making it easier to detect networks of fraud. It is also possible to assign risk scores to transactions or entities based on their likelihood of being associated with money laundering. This helps in prioritising high-risk cases for investigation.

Andrew Doyle

Enhanced customer due diligence

Automated software platforms can analyse customer information, public records, and other data sources to perform thorough due diligence on clients, identifying potential risks or suspicious behaviour before they are signed up.

RegTech automates the process of verifying customer identities and conducting enhanced due diligence on individuals and on companies, ensuring compliance with Know Your Customer (KYC) and Know Your Business (KYB) regulations, both vital components of anti-money laundering efforts.

More accurate identity verification

Biometric verification is a powerful tool in enhancing anti-money laundering and fraud detection. It involves using unique physical or behavioural characteristics of an individual to verify their identity. Traits like fingerprints, facial features, iris patterns, and voiceprints are unique to each individual and are nearly impossible to replicate or forge. This makes them highly reliable for verifying that clients are who they say they are.

Biometric verification can also reduce the number of false positives in fraud detection by providing a highly accurate means of confirming the identity of a customer. This leads to more reliable results and lessens the need for manual intervention.

Continuous and real-time monitoring

Real-time alerts allow for immediate action when suspicious activity is detected. This can prevent or minimise potential financial losses and damage to a company’s reputation. By identifying and acting upon suspicious activities in real-time, financial institutions can reduce the risk of financial losses associated with incidents of economic crime.

Continuous monitoring with real-time alerts can also help refine the accuracy of anti-money laundering systems over time. This reduces the number of false alerts and decreases the need for manual intervention.

To the future

According to data from Capgemini, 68 percent of UK institutions are already looking into real-time anti money laundering monitoring systems to stay ahead of potential threats while 86 percent, says Refinitiv, agree that innovative digital technologies have helped them identify financial crime.

So the data tells us that companies are already heading in the right direction when it comes to fighting fraud, but as the landscape of financial crime continues to evolve, financial firms must ensure they do the same.

By leveraging the right technology, businesses can ensure they not only meet regulatory requirements and safeguard their operations, but also protect their reputations and crucially, maintain that all important customer trust.

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In 2024, payments will evolve to broaden accessibility




Attributed to Roy Aston, COO at Paysafe.


As we look to 2024 and beyond, businesses will need to adapt experiences to changing consumer needs and demands, working with payments providers to increase accessibility, offer broader choice, and more.

We break down some the forces driving evolution in payments over the coming years.

Payments need to be available to everyone, everywhere

Regardless of their location or situation, consumers do not want to wait when it comes to payments. The proliferation of smart devices has given users access to everything, all at once, and this is also expected when making transactions.

In 2024, banks and financial institutions will continue to push ahead with this journey to offer smooth, secure payments to everyone, everywhere, delivering services at the lowest possible barrier to entry. This also means ensuring consumers, even those that are unbanked or underbanked, have access to remittances and cross-border payments.

The first step in achieving this goal will be to improve reliability, security and availability, which may see traditional payment methods like debit and credit cards – still the most popular payment methods – become less dominant, while alternative payment methods (APM) like eCash and digital wallets will grow.

This is because, with the right payment provider, merchants can ensure these APMs are available anywhere in the world – eCash, for example, does not require a bank account to use. In addition, digital wallets and online cash can offer swift, secure transactions, helping users overcome security issues by not requiring them to enter their financial details.

Financial companies will embrace collaboration in 2024

While businesses can address consumer payment concerns using APMs, they must also look to bolster their own defences as the threat landscape changes. Increasingly advanced technology, like AI models, are now accessible to far more people, including threat actors.

To combat this escalating threat, it’ll be no surprise to see more financial companies collaborate in 2024 as they seek to improve cyber risk mitigation. This makes perfect sense – and would be a positive step for the industry – though it is easier said than done.

Businesses must share data legally, while aimed toward a positive purpose, rather than for pure profit. For example, if a financial organisation gains intelligence on a cyber group, they could share this with other companies to protect against bad money movement.

Ideally, collaboration could help improve anti-fraud, anti-money laundering, and cyber security measures, and more broadly reduce risk for businesses and consumers alike. But first, thinking around data governance may need to change.

Existing trends will evolve

While exciting new trends will emerge in 2024, we’ll also see the evolution of some that have yet to reach their full potential.

Embedded payments, for example, will continue to develop, with more businesses bringing together financial products with features like loyalty schemes to offer more added value to consumers.

Decentralised finance, too, should continue to build momentum in 2024. While decentralised finance, and specifically NFTs, have faced challenges this past year, it will be no surprise to see companies get to grips with changing regulatory requirements and continue to build in this area.

Open banking could also see a big 2024, with more APIs becoming available, and companies starting to develop new solutions to enhance customer experience and reduce friction in the payment ecosystem.

And while evolution rather than revolution is a necessity in technology, it’s always exciting to look ahead to the big trends that could shape the future – perhaps not in the year ahead, but beyond.

The future is quantum

Quantum computing is a trend that is as exciting as it is potentially frightening. Able to perform computations that are exponentially faster than ever before, quantum computing represents a new frontier and it will be thrilling to see how it is used in the years ahead.

Combined with AI, for example, quantum computing could optimise processes at a speed and scale never seen before – with serious benefits passed onto consumers.

In the nearer term, however, ensuring payments are available and accessible for everyone must remain the focus in 2024.

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