Instant gratification has become the norm in our age. We have instant access to information and answers thanks to artificial intelligence (AI), such as Siri and Alexa.
The ability to respond quickly and complete tasks in a matter of seconds is what the new generation wants. We want more technology because it makes even the most basic tasks much easier.
The banking sector, unsurprisingly, has followed this trend and provides its customers with the most recent technology to facilitate easy access and flexible banking. Cybercriminals will exploit new vulnerabilities as financial institutions (FIs) transform the industry with the latest technology.
How can banks and credit unions be competitive while still providing better security for their clients? AI for cybersecurity gives FIs the ability to scale up more efficiently and find insights into data that might otherwise be difficult.
This technology allows financial institutions to not only respond quickly to cyberattacks but also make it easier for them to stay ahead. AI is also a significant tool for FIs to prepare for changes in compliance and risk.
Six Benefits of AI/ML to Financial Institutions
Take a look at the six ways AI/ML could help your financial institution manage itself, monitor key metrics, improve safety posture, and keep compliance.
1. Detect Fraud Before Money Leaves Your Account
Javelin Strategy & Research discovered $28 billion in identity fraud losses for consumers across the United States. Because it protects clients and prevents financial loss, financial institutions must identify fraudsters before they act. While banks may not be liable in all cases, FIs are expected to absorb losses.
Customers may sometimes bear the loss. This affects the trust relationship between FIs, their clients, and FIs. Implementing AI, particularly products designed for banking, can help you to do this.
FIs can help close the gap by identifying and stopping breaches in their tracks before they happen. It is nearly impossible to sort through the millions of cyber events that occur for the average client, or more so for larger institutions. AI can create a baseline of transaction patterns, which can be used to identify anomalies and take proactive steps.
2. Reduce False Positives
False positives are a new threat to the neck-and-neck battle between technology use and cyberattack threats. Over half of all online threats are found by SOCs (Security Operation Centers). False positives can cause havoc in a company's SOC budget and time.
We can reduce the number of false positives by using AI to decrease our dependence on staff so that we can use those precious human resources to investigate real and complex threats.
While false positives are increasing in frequency and volume, smarter cybersecurity technology can help to reduce the number of alerts. ML can be used to distinguish between a threat that is real and benign.
3. Manage Regulatory Changes Effectively
Financial institutions are constantly being updated with new regulations. Manual systems for assessment and implementation have become inefficient.
Financial institutions would spend hours reading and understanding the new regulations as well as making necessary adjustments. A new approach to addressing regulatory changes has been created by ML. It is important to take a faster approach because financial institutions can be subject to out-of-compliance fines.
Intelligent process automation (IPA), is used to quickly and accurately assess large amounts of data in real-time so that your financial institution remains in compliance.
Data Bricks states that AI is used to automate the regulatory change management process. Successful implementation of AI can solve the problems faced by financial firms, which include heavy fines for non-compliance. This technology can be combined with the expertise of those who are familiar with the FI industry to achieve superior results.
4. Enhance Anomaly Detection
It is time-consuming and tedious to regularly assess transactions for unusual behavior. But this needs to identify any deviation from the normal because even a small one can be dangerous.
AI can analyze large amounts of data to identify normal transaction patterns. Then, it will assist in detecting anomalies that could indicate a cyberattack threat. AI can scan through large amounts of data to detect a breach in the algorithm.
After distinguishing between normal behavior and abnormal behavior, adjustments are made to ensure that fraud detection and assessment are consistent. AI can also detect anomalies that cannot be detected by a standard rules-based approach to fraud detection.
Customers who do not follow the "normal" banking procedures can have their accounts flagged and blocked. Nothing is more frustrating than being locked out of your account to pay bills at 2 AM. This is because it does not fit the usual "times for banking".
AI allows accounts to be monitored continuously and automatically. This allows FIs to offer a higher level of protection while customizing security to customers' needs.
5. Reduce Human Error
Every financial institution is vulnerable to human error. IBM Cyber Security Intelligence Index conducted one of the largest studies of breaches across 130 clients. It found that human error was a significant contributor to 95% of breaches.
An AI system can be used by financial institutions in conjunction with a SOC team that monitors for alerts, analyzes risks and compliance, and reduces the workload. Automated systems can be used as the first line of defense, with capabilities beyond human limitations. They also reduce the chance of making mistakes.
6. Gain a Competitive Advantage
In order to offer the best and most efficient service in their industry, FIs must always be competitive. Fintechs are setting new standards in the use of technology to deliver a better customer experience. According to Ernst and Young consumer financial, more people consider a fintech company their top-trusted financial brand than a bank.
Traditional banks are "keeping pace with the Joneses" and implementing the latest technology to offer faster and more convenient daily banking. To remain competitive, FIs must also ensure that their customers have access to their money and data using a high level of security. AI cybersecurity products designed specifically for banks provide streamlined protection that caters to the specific needs of your FI.
Conclusion: Future of Artificial Intelligence in Financial Institutions
Financial institutions are fighting against malign acts as they continue to run businesses using more advanced technology. Future FI will use this technology to not only simplify daily operations but also to provide a higher level of protection.
The financial sector needs to be competitive and current in order to keep up with the changing world of compliance, security, risk, and fraud. Artificial Intelligence will revolutionize how banks and credit unions offer security to protect their customers' assets and data.