Bobsguide published an interview with industry experts regarding the use of Artificial Intelligence (AI) in banking and bank related activities. For those of us who don’t get the opportunity to follow up on new opportunities in AI everyday, this article provides a good foundation. Including discussion regarding where AI is having the most, near-term impact in financial services:
Tom Blomfield, CEO of digital-bank Monzo says: “There are three areas that AI is set to make an impact.
The first is fraud and fraud detection. The second is credit underwriting; the process of deciding who is going to be creditworthy and why. The way credit underwriting is done at the moment is, very broadly speaking, individuals’ names and addresses are checked with a credit reference agency to acquire a credit score. If their score is over a certain threshold, they can borrow credit. It’s very naïve. There are a variety of indicators you can feed in; maybe your credit appointment should depend on your employment, where you live, who your friends are, or whether you spend your money on Uber or black cabs. There’s a huge amount of data that’s not being used.
And the third area is personalization; recommending products and services based on your data. That being said, for these three areas you can actually get 75% of the benefit by simply having the data in one place and running regressions over that data, using traditional linear regressions and writing rules. The biggest problem is getting the data in one place.
AI is reliant on data or access to data which will be a hurtle financial institutions with complex legacy systems and operations will need to overcome. Spiros Margaris, founder of Margaris Advisory commented on other challenges:
The biggest challenges for AI are not the costs, computing power or technology, because the exponential computing advancements we see are faster than the legacy corporate and system structure can handle. I strongly believe trust, privacy and the fear that AI will kill more jobs than it will create are the biggest concerns the AI industry needs to address.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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