Security will pull AI laggards off the fence

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The past year has brought dramatic changes to the financial services industry. From the introduction of new regulations like PSD2 in Europe, to disruptive new technologies transforming the way consumers conduct banking and payments, the landscape is constantly changing. Facing the accelerating pace of technological change, financial institutions are left wondering what 2020 will bring.

I believe that one of the most significant technology trends that will impact the financial services industry in 2020 will be the growing adoption of artificial intelligence (AI). However, even as financial institutions, issuers and payment companies increasingly embrace AI, I anticipate they will need help learning how to use it to its full potential.

Surveys of financial institutions show that the majority (75%) of banks with more than $100 billion in assets are currently implementing AI strategies. Yet, even with growing adoption, most financial institutions are still holding back from providing enough data to use AI in its most complete form.

Often, this is due to the complexity of their own infrastructure and legacy systems. Most banks today have siloed data pools scattered across their operations, making it difficult to pull, aggregate and analyze the data at scale. But by moving to more agile processes and bringing their back-end infrastructure into the digital era, financial institutions will be able to start taking full advantage of AI and the benefits it can bring.

One of the best applications of AI in financial services lies in the area of cybersecurity, particularly in risk assessment, fraud prevention and dynamic authentication. The fight against fraud relies heavily on analyzing vast amounts of real-time data. New, risk-based technologies powered by AI and machine learning (ML) enable financial institutions to analyze transaction, device, geographical and behavioral data to make real-time security decisions, detecting and preventing fraud as it happens.

For example, we’re beginning to see financial institutions leverage AI to create intelligent adaptive authentication processes, which analyzes the risk of a situation based on real-time data and then intelligently adapts the security and required authentication accordingly, whether that be biometrics, device analysis, geolocation, a PIN, or a combination of a number of methods. Intelligent adaptive authentication helps financial institutions better safeguard their data and stem the tide of cyber attacks without compromising user experience or needing to manage and maintain an infinite number of static policies.

Over the next year, as more financial institutions and payment companies update their back-end legacy infrastructures, I believe it will become rare to see banks not using AI in an efficient way. When complex fraud detection models are able to be read and understood by people, and when security measures are made intelligent and adaptive so as not to inconvenience legitimate users, then I believe we will see the power of AI shine through across the financial services industry.

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Artificial intelligence Digital payments Authentication Payment processing ISO and agent