There aren’t many technologies that have captured the imagination of futurists in the financial services quite like Artificial Intelligence (AI). While images of autonomous cars, robot servants, and Skynet-like uprisings are easy to conjure up, many firms are turning to AI to transform businesses, drive efficiency and support their customers.
Automated processes and the computerisation of trading and order flow have been around for decades, and banks have had long-established frameworks and governance guidelines in place for the management of this data, according to a report by FinTech Futures on AI in the Financial Industry.
One could argue that the quantitative methods and algorithms used on trading floors in the 1990’s were a foundation for the implementation and development of modern AI systems. The explosion of big data has also had a profound impact on the development of AI technologies.
Cloud software company Domo estimated that by 2020 a person will generate 1.7 megabytes of data every second. An oft-quoted IBM statistic from 2016 remarks that 90% of all data created in history was generated between 2014 and the end of 2015.
The curation, analysis and quantification of this data leaves a huge market opportunity for banks and financial services firms, and its one that can only be grasped through the implementation of automated systems. Things are never as simple as letting AI loose.
First it must be trained to know what it is looking for. This is where the application of machine learning (ML) has the potential to improve data analysis outcomes. ML promises increased data efficiency, accessibility, and usability.
On the retail side, banks are aiming to use ML techniques to tailor products and services to their customers, tapping into the data generated by customers’ daily interactions and spending habits.
Challenges remain in the implementation of data-scrying technology, not least in how trustworthy and fair the conclusion drawn by automated systems can be. This has become the focus of regulators across the world.
In the UK the Office for AI and the AI Council were established in 2018, while in Europe the European Commission (EC) appointed the High-Level Expert Group on Artificial Intelligence and published a set of ethics procedures in April 2019, seeking to guide firms experimenting with the nascent technology.
AI will be a key feature in how banks and financial services firms operate and deliver their services for years to come.
The report investigates the futures usage of both.
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