Experts from SAS, a global leader in AI and analytics, share their predictions on the potential successes and challenges the finance industry may face in 2024. As industries worldwide continue grappling with the proliferation of generative AI, these insights are intended to guide businesses in making critical strategic decisions.
Several SAS experts have projected that 2024 will see a mix of successes and failures in the financial sector in response to generative AI and other transformative technologies. Impending bank collapses and the continually evolving landscape of risk management are some key concerns identified.
"2024 will bring more bank failures, forcing banks to recognize the most important question in risk management: What is our own probability of default?" posits Donald van Deventer, Managing Director of Risk Research and Quantitative Solutions at SAS.
Another significant challenge for the sector is the surge in fraud attempts due to the advancements in deepfake technology and generative AI. Stu Bradley, Senior Vice President of Risk, Fraud and Compliance Solutions at SAS, warns of an impending "Dark Age of Fraud" in which financial firms will scramble to employ AI solutions in a bid to counteract sophisticated fraud strategies.
The influence of AI in the financial world isn't limited to countering negatives. Troy Haines, Senior Vice President of Risk Research and Quantitative Solutions at SAS, anticipates insurers will increasingly utilise AI to shore up liquidity and stay competitive in the face of escalating climate risk. This will be through the automation and enhancement of claims processing, fraud detection, and customer service among other functions.
Meanwhile, Joan McGowan, Global Banking Industry Advisor at SAS, accentuates AI's potential to transform financial crimes compliance. The global cost of compliance currently stands at $274 billion, the majority of which goes to labour. By incorporating machine learning and network analytics into anti-money laundering systems, the number of false negatives and positives can be reduced dramatically, increasing the efficiency of transaction monitoring.
However, despite these promising applications of AI, businesses are cautioned against hasty deployment. Franklin Manchester, Global Insurance Strategic Advisor at SAS, predicts that one of the top 100 global insurers will go out of business in 2024 due to the repercussions of deploying generative AI too quickly without proper oversight.
Other notable predictions from SAS cover the rise of central bank digital currencies and their associated risks, the utilisation of conversation models in enhancing customer experience, and the adaptation of AI-powered digital engagement in banks' response to the growing phenomenon of banklessness amid the digital banking revolution.
While generative AI holds immense promise for the finance industry, careful and considered adoption is key to reaping its benefits without succumbing to its risks. AI, indeed, may not be a universal panacea, but its judicious use can make it a powerful tool for enhancing the business landscape.