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WHAT EVOLUTIONARY AI MEANS FOR FINANCIAL SERVICES

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FINANCIAL SERVICES

by Babak Hodjat, VP of Evolutionary AI at Cognizant

 

Many banks and other financial services institutions (FIs) are beginning to recognise the benefits of AI-driven solutions as a way to get ahead in the market and challenge the competition. Amongst many other benefits, the technology enables organisations to offer hyper-personalised customer experience,  dramatically improve internal decision making, and drive operational efficiency. However, many businesses are struggling to move beyond the experimental phase and reach actual AI deployment. It is those organisations that are at risk of being left behind.

The financial world has already been transformed by AI, and this transformation is continuous. A new breed of AI, known as ‘evolutionary AI’ has begun to further accelerate innovation. It is capable of automatically designing itself with little need for explicit programming by humans – innovatively creating complex AI models, and optimising decisions considering multiple scenarios.

This technology is revolutionary for industries across the world, but in particular it is set to transform the financial services sector. Enabling businesses to spot novel strategies that would never have been identified by human data scientists, and, in turn, allowing companies to take full advantage of today’s massive data sets – evolutionary AI will soon be a vital tool in all FIs’ arsenals.

 

The nuts and bolts of evolutionary AI

Emerging technologies that enable AI algorithms to design themselves are allowing organisations to transcend human limitations. Evolutionary AI operates iteratively. Firstly, it randomly generates a set of potential solutions to form an initial population and assigns a score to each solution based on how well it performs relative to other solutions. In the second round, it retains the solutions that performed best, perhaps only 5% of the total, and recombines their components, sometimes “mutating” them to create a new population. This new population is then tested, and the process begins again. Over multiple generations, the appropriate components of the more successful solutions become increasingly prevalent in the population, and eventually a solution is discovered that yields the best outcomes.

 

Advantages and use cases

Compared to human design, evolutionary AI can be deployed far more quickly, avoids biases and preconceptions, and typically performs better. Furthermore, the chosen model will evolve and improve over time based on new data.

Evolutionary AI can be applied in a wide variety of areas at FIs. Some examples include designing quantitative trading strategies to maximise returns while minimising risk and loan underwriting. Rather than relying on human analysis, evolutionary AI solutions can quickly analyse all the combinations of relevant variables to create models that more accurately assess the risk of default by a potential borrower.

 

A recipe for success

In order to reap the benefits of the technology, FIs should focus on the following:

  • Responsible AI – Behave in ways that make customers and employees comfortable, i.e. not making decisions that are unethical or exhibit bias. Companies need to monitor them to ensure they continue to act appropriately, as they learn and evolve.
  • Viewing AI through a business lens – Having AI projects managed by cross-functional teams with business executives in the lead is a good place to start. Companies also need to look across their organisations to identify opportunities to generate concrete business value from AI — not only in reduced costs but also in boosting revenues by delivering enhanced customer experiences and through improved decision-making.
  • Enhance data management – AI applications depend on access to timely and accurate data, which is a challenge for many FIs that have fragmented data architectures with multiple legacy systems. Companies need to identify which types of data are required for each AI project and ensure they can be captured in an appropriate format.
  • Approach with speed and caution – AI projects need to be rolled out quickly, while at the same time be rigorously measured, so failures are terminated promptly while successes are moved into production.

The sophistication of AI technology is set to significantly improve over the coming years as it continues to design and test itself. As a result, it will become more critical to the productivity of FIs, and soon businesses will recognise it as a vital tool for consulting on important business decisions. It will not be long before humans and AI are working alongside each other, with robots handling routine tasks, enabling employees to focus on more complex and sensitive activities. Delivering more value together than either could on their own.

 

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UK Organisations turn to artificial intelligence to fight sophisticated cyberattacks

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New research by cybersecurity expert Mimecast finds that email attacks are becoming more frequent and sophisticated

More and more companies in the UK are using artificial intelligence (AI) and machine learning (ML) to fend off increasingly sophisticated cyber-attacks, according to new research from cybersecurity specialist Mimecast. The research finds that 40% of UK organisations are already using AI or ML in their organisations’ cybersecurity programme, with 30% planning to do so within the next 12 months.

The use of advanced technologies such as AI and ML is in direct response to the growing sophistication of cyberattacks that UK businesses are experiencing. 53% believe that increasingly sophisticated attacks will be their biggest email security challenge in 2022, leading to 80% believing it is at least likely their organisation will suffer a negative business impact from an email-borne attack this year.

 

Growing threat landscape

The research shows that email remains the largest threat vector for UK businesses, with 71% of respondents reporting an increase in the volume of email threats their organisation has faced in the last 12 months. This includes phishing with malicious links or attachments (56%), impersonation fraud or Business Email Compromise (53%), and malicious insiders (43%). However, it isn’t just email attacks that are on the rise, as 90% of UK businesses experienced at least one spoofing attack that uses a lookalike web domain or a clone of their organisation’s website in the last 12 months. The average UK company has experienced 11 of these attacks.

On top of this, employees are also presenting organisations with a very real threat to their cybersecurity. The survey identifies that IT decision makers have relatively low confidence in their colleagues’ cyber awareness , believing that there is a risk of an employee making a serious security risk due to oversharing company information on social media (84%), poor password hygeine (80%), using personal email (80%), or using cloud storage and other shadow IT functionality (81%). When an employee does full victim to an attack, it frequently results in more widespread consequences. 85% of respondents say threats have spread from one infected user to other members of the organisation.

 

AI to the rescue

To overcome this growing threat landscape, more and more UK organisations are turning to advanced technologies to strengthen their cybersecurity position. The 40% of UK organisations that are already using AI as part of their cybersecurity strategy are already seeing a number of benefits, including increased accuracy in terms of threat detection (54%), reduced human error within cybersecurity team (51%), and reduced workload/working hours for cybersecurity team (45%).

Despite these very real benefits, there is the very real danger that many UK organisations will miss out due to a lack of budget dedicated to cybersecurity. The research highlights a clear discrepancy between the amount IT decision makers believe should be spent on cyber resilience and how much budget is actually allocated by business leaders. IT decision makers in the UK believe that 16% of their IT budget should be allocated to cyber, but at the moment they see less than 12% allocated. Missing out on new technology innovations such as AI is identified as the most likely consequence (49%) for organisations where the cybersecurity budget is not as high as respondents believe it should be.

Elaine Lee, AI expert at Mimecast, said: “There is no doubt that cyberattacks are becoming more frequent, as UK businesses adjust to the world of hybrid work. On top of this increase in frequency, we are also seeing a rise in the sophistication of attacks. This is creating a perfect storm and making it more difficult than ever for organisations to keep their businesses secure. With this in mind, it is no surprise to see so many organisations turn to advanced technologies such as AI to bolster their cybersecurity defences. AI solutions can help businesses to automate security processes, ensuring they are better able to fend off attacks, as well as providing their security experts with more time to focus on high-level analyses that require human interaction.”

Lee continued: “Organisations that have yet to invest in AI technologies as part of their cybersecurity strategy should do so. Cyberattacks are going to continue to be a major threat to UK businesses and these businesses need to respond accordingly with sufficient budget. A successful cyberattack has the potential to cause serious ramifications for a business, including both financial and reputational damage. Now is the time to take this threat seriously and get prepared.”

 

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Addressing the talent gap within cybersecurity

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By Merlin Piscitelli, Chief Revenue Officer, EMEA at Datasite

 

Rising geopolitical tensions and increasingly sophisticated cyberwarfare tactics have meant that cybersecurity threats are now more prevalent than ever. In current times, the number of cybersecurity attacks are increasing in volume and intensity on a global scale and if a company is not properly equipped to deal with this reality, it could directly impact their survival.

Recently, some sections of businesses were compromised, taken offline, and employee accounts within key microchip and electronic powerhouses were exposed due to cyber-attacks. Most alarmingly, some of these attacks were perpetrated by the same hacking extortion group.

As digitalisation continues to increase throughout the world, and events like Russia’s invasion of Ukraine take place, it is now more important than ever to focus on combatting cyber-crime. The industry understands this, as record levels of investments have been pouring into the sector to advance our capabilities within the field.

The cybersecurity surge

Within the last 12 months, the cybersecurity sector has seen major growth with now almost 2,000 firms active within the UK providing cyber security products and services. In 2021 the UK cybersecurity industry contributed £5.3 billion to the economy, an increase of about a third from 2020, and cybersecurity firms have raised more than £1 billion external investments in 84 deals. It’s therefore fair to say that the acceleration towards digitalisation caused by the pandemic has meant businesses have had to increase their cybersecurity efforts, leading to increasing demands within the sector.

Merlin Piscitelli

As the industry finds new solutions to combat cyber-attacks, cybercriminals are continuing to explore new tactics to ensnare victims. This has resulted in higher demands for those skilled within the industry. Now, with over 2.5 million cybersecurity jobs available and the war for talent rapidly gaining momentum, it’s clear that pressure is increasing.

Cybersecurity and data protection is a strategic investment and a highly specialised endeavor. It can be more cost-effective (especially for small and medium size firms) to outsource this responsibility and partner with a vendor to design and implement solutions. Business leaders will need to ensure they are working with a reputable partner that can offer the best level of protection and technical expertise to fit organisational needs.

The talent gap

While demands are currently high, the supply isn’t there to match. In the UK, the cybersecurity talent pool has fallen short by around 10,000 people a year, and in the previous 12 months, the UK’s cyber skills shortage rose by more than a third. As a result, cybersecurity is now the most sought-after tech skill in the UK.

With more than half, 54%, of UK CEOs believing cybersecurity presents the best opportunity for TMT dealmaking over the next year, demand will rapidly outstrip supply of expertise unless there is a rapid change within the industry.

Championing the workforce

Businesses have had various strategies when looking into combatting this issue. When asked what the main drivers of recent and future cross-border technology acquisitions are, one-third of UK M&A professionals surveyed cited access to skilled/specialised talent.

Investing in your workforce is the tried and tested way of mitigating against cyber-attacks and managing risk. Having access to the necessary resources to protect your digital ecosystem and build momentum by upskilling individuals already working in the tech space, along with attracting new talent, will be crucial to tackling the current professional shortfall.

Furthermore, bringing diversity and inclusivity into the process will help truly overcome the war for talent, as businesses will need to acknowledge the correlation between the skills shortage and the lack of inclusivity needed to diversify the sector.

Ultimately, addressing the current skills gap within cybersecurity will require combined efforts from businesses, academia and governments. Championing students to take an active interest cybersecurity and go through the necessary training to develop the skills needed in the industry will go long way in evening out the playing field.

It is only by investing in developing cybersecurity talent that will we have enough people with the expertise required to protect organisations digital ecosystems as the threat landscape becomes more diverse.

 

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