Study: AI to play 'major role' in fraud prevention, consumer experience

Dive Brief:

Financial services insiders are banking heavily on AI implementation, despite its potential drawbacks, a report from KPMG found.
Financial services industry insiders expect AI to play a "major role" in preventing and detecting fraud as well as in enhancing customer experience, according to KPMG’s study, “Living in an AI World 2020: Achievements and Challenges of AI across Five Industries.”
Only 42% percent of finance respondents considered AI to be more hype than realistic; this constituted the lowest percentage of any industry surveyed. Additionally, 47% of those respondents said their organizations are presently functional in AI deployment. In addition to financial services, the survey looked at four other industries: healthcare, retail, transportation and technology.

Dive Insight:

Atif Zaim, customer and operations service line leader at KPMG, thinks the nature of large financial services businesses makes rapid AI deployment "rigorously challenging."

"AI is an example of tech that’s tried and tested for many use cases, but banks are getting limited benefit out of it because they can’t get to real adoption in the business," Zaim said in a summary of the study. "Banks struggle with change management associated with new tech. Those who can overcome that will likely enjoy a competitive advantage."

Not all respondents are equally excited about the possibility of the new tech becoming mainstream. 72% of respondents worried that AI could pose a security threat; 69% see it as a direct consumer data security and privacy threat.

KPMG says these businesses, if they manage to overcome these hurdles, could bolster revenues significantly by heightening customer experience, which 44% of respondents said would be the biggest positive impact of AI.

AI's impact on cybersecurity

Over the next three years, financial workers predict the top three most impactful uses of AI will be in RPA (56%), risk management assessments (49%) and fraud prevention (47%).

"It’s no secret that AI is expected to play a major role in privacy, security and fraud prevention," A KPMG spokesperson told CFO Dive in an email. "As technology continues to evolve and traditional security measures may become ineffective, fraud prevention AI will prove crucial to protecting a company’s bottom line, as one major breach could threaten [its] existence."

The spokesperson said company leaders must ensure AI models align with their company’s quality and security standards, as well as with corporate values.

But with risk, compliance and legal hurdles, instituting enterprise-wide change can take a very long time, so KPMG encourages clients to get a head start.

"There is a time-to-value equation, meaning AI implementation must be done strategically and linked to business strategy," the spokesperson said. "[If the initiative is to] mitigate risk, [...] investing in cybersecurity is a strategic advantage and a catalyst for growth."

AI stirs the talent gap

Talent gap was a barrier cited by respondents to timely AI deployment. In terms of skill set, less than half of respondents believe their employees are prepared for wide-scale AI adoption.

The study found that only 49% of financial services insiders believe their employees are prepared, skill-wise, for AI adoption, and only 23% of those employees would be enthusiastic about AI adoption at all.. Ultimately, KPMG said, this lack of training, which is a result of lack of initial investment in funding, leads to lack of understanding of technology capabilities.

"CFOs must invest aggressively in AI technology, training, and governance, to ensure they have the capabilities to thrive as the financial industry evolution continues," the spokesperson said.

Neglecting to invest in these areas, or non-aggressive adoption, carries a major long-term risk: falling behind. "The ability to deploy AI for the full range of benefits, across the front, middle and back office, will separate the new class of leading companies from the rest," the spokesperson said.

The study confirms AI will only grow more embedded in daily life, both for businesses and consumers. From the authors’ view, it is critical AI be seen as more than a technology: an "integral part of business strategy." Only then, they say, "will enterprises realize the true benefits and gain competitive advantage."