Today’s digital age is changing how we access and manage our money. We’re seeing the growth of mobile banking, virtual assistants, and chatbots to help us with everyday tasks like paying bills or monitoring our bank balances. In addition, artificial intelligence (AI) is also transforming the way we manage our money. These changes are due to an increase in digital services that require users to input personal information to access those services. This has led to an increase in cyber attacks as hackers use this personal information to steal identities and financial assets from individuals and businesses. To better protect consumers and businesses from cyberattacks, banks are implementing AI solutions for authentication, fraud detection, anti-money laundering measures, and other security processes. Let’s take a look at how AI is transforming the way we manage our money so you can see how these trends might affect you in the future.
Authentication with AI in Banking and Finance
Authentication is the process of verifying the identity of a user. AI can be used to authenticate identities by analyzing large amounts of data and comparing it to user data to determine whether or not the user is who they say they are. This can be done through biometrics such as fingerprints, voice recognition, or facial recognition. Banks are using AI to authenticate users when they log in. This process verifies that the person is who they say they are and that they’re accessing the correct account. AI is also used to authenticate users when they conduct financial transactions, such as when making a payment. AI for authentication can also be used for identity verification when customers sign up for a new account or want to unlock their account after a period of inactivity.
Blockchain and AI Working Together
The blockchain is a shared digital ledger that stores data about all financial transactions between various parties. It functions as a type of digital trust that enables secure, peer-to-peer transactions without the need for a central authority. AI can be used to analyze the data stored on the blockchain to detect unusual behaviour or transactions that may indicate fraud. Therefore, AI can be used to verify that all transactions are legitimate and meet compliance requirements. AI can also be used to create predictive models that forecast the likelihood of specific asset price movements.
AI for Anti-Money Laundering
Anti-money laundering (AML) laws require financial institutions to monitor their customers’ financial transactions for potential money laundering activities. This includes monitoring transactions that involve large sums of money where the source of the funds cannot be verified as legitimate. AI can be used to monitor digital transactions and detect suspicious financial activity. AI can also help identify patterns in transactions that indicate potential money laundering. AI can also be used to identify specific individuals and organizations involved in money laundering activities, which can be shared with law enforcement for investigation.
Other Uses of AI in Banking and Finance
Authentication and fraud detection aren’t the only ways AI is being used in banking and finance to protect your money. AI is being used for many other tasks to improve the customer experience, including:
- Account opening: AI solutions can be used to speed up the process of opening a new account by quickly analyzing the customer’s information and automatically determining if they qualify for the account.
- Customer service: AI virtual assistants can be used to answer basic questions that customers may have about their accounts, providing them with the information they need without having to make a phone call.
- Credit scoring: AI can be used to evaluate potential borrowers and determine if they qualify for a loan.
- Fraud detection: AI can be used to identify potential fraudulent activities conducted by employees within the business.
Fraud Detection with Artificial Intelligence
As we’ve seen, AI can be used to detect fraud in many different ways. One way is by analyzing the data stored on the blockchain. AI can be used to monitor suspicious transactions, including the transfer of funds to malicious parties. This can be used to prevent or stop money laundering activities. AI can also be used to monitor transactions for any signs of anomalies, which could indicate a hack. Another way AI can be used to detect fraud is by analyzing customer data, such as credit scores or spending habits. AI solutions can be used to identify unusual or inconsistent data that may indicate fraudulent activity, such as when a person attempts to open several new accounts in a short time. This can be a red flag for financial institutions and can be used to shut down fraudulent accounts before they do any damage.
Virtual Financial Assistants
Financial virtual assistants are AI-powered chatbots that provide customers with information about their accounts and help them complete tasks, such as paying bills or transferring funds to other accounts. Virtual assistants can be accessed through a chat app or by calling the business’s helpline. These AI assistants can be used to complete a wide range of tasks, including:
Customers can use virtual assistants to get account balances, pay bills, and set up automatic payments.
Virtual assistants can be used to track expenses and savings goals.
They can provide customers with investment advice and suggestions for managing their money.
AI is transforming banking and finance by being used to protect customers against fraud and identity theft. It is also transforming how financial institutions operate internally, enabling them to increase efficiency and scale their operations. However, many people are concerned about the impact AI could have on the financial system. While AI has the potential to improve the experience of banking and finance, it also has the potential to be abused by malicious parties. Financial institutions that implement AI solutions need to ensure they are properly safeguarded against cyber attacks.