The financial services sector stands on the precipice of significant transformation in 2024, as emerging technologies and trends reshape the industry. Insights and predictions for the year ahead have been offered by experts and executives from SAS, a leading authority in AI and analytics. From AI-driven fraud to climate risk, the sector is poised to encounter a range of challenges and opportunities.
The spotlight is on risk management
It is anticipated that banks will experience an increased number of failures in 2024, prompting a substantial focus on risk management. A survey of risk professionals has revealed that 80% of firms are seeking to enhance their asset liability management (ALM) functions, indicating a shift in priorities within the industry.
The rise of AI in fraud detection
With the advancement of generative AI and deepfake technology, fraudsters are becoming progressively sophisticated. Phishing messages, imitation websites, and voice cloning are just a few of the new tactics employed by criminals. Financial firms are expected to intensify their efforts in AI adoption to combat the growing wave of fraud.
AI’s impact on insurance
The looming threat of climate change has resulted in substantial insured losses from natural disasters. Insurers will need to increasingly harness AI to effectively manage their data, improve risk assessment, and enhance claims processing and fraud detection.
AI in anti-money laundering
The costs of compliance for anti-money laundering programmes have risen to a staggering $274 billion globally, with only 1% of criminal proceeds being confiscated. Incorporating machine learning and network analytics into current AML systems is seen as a potential game-changer in improving transaction monitoring.
AI deployment challenges for insurers
The swift deployment of generative AI within the insurance industry may lead to unintended consequences. If not managed carefully, the perception of AI as a cure-all could trigger faulty business decisions, potentially leading to corporate collapses.
The rise of central bank digital currencies
Central bank digital currencies (CBDCs) are gaining traction as governments explore secure, digital payment options for their citizens. However, CBDCs come with unique fraud and financial crime risks that must be effectively managed.
The maturing of generative AI
The hype surrounding large language models (LLMs) is expected to diminish in 2024, with a shift towards monetising LLMs for specific use cases. This will bring about a more targeted approach to the deployment of generative AI technology.
AI’s impact on recession
Advancements in artificial intelligence and automation are projected to drive productivity gains, potentially aiding economies in avoiding recession. However, certain industry segments may still experience recession-like conditions.
Recalibrating risk models
Banks will face the challenge of adapting their risk decisioning models, lending policies, and forecasts to mitigate impending recession risks and higher default rates.
Conversational AI in customer experience
Generative AI technology will play a crucial role in fostering a more human-like interaction through chatbots, bringing insurers, banks, and businesses closer to their clients. This advancement is expected to streamline client communication and enhance operational efficiency.
The impact of digital banking on AI innovation
The digital banking revolution has left behind those who lack digital confidence, leading to the concept of ‘banklessness.’ Financial institutions will need to leverage AI-powered digital engagement to enhance customer experience and competitiveness.
The ethical implications of AI
As insurers embrace AI and machine learning, they must ensure that their models and algorithms promote fairness and transparency in decision-making processes.
For additional insights and predictions for 2024, please visit the SAS website.
About SAS
SAS is a global leader in AI and analytics software, offering industry-specific solutions to help organisations make faster, data-driven decisions.
This article was originally published on PRNewswire by Danielle Bates and Julia Norton.
Source:
SAS Institute Inc.
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