EBA says AI is key to defending systems
Written by Peter Walker
Jointly-developed artificial intelligence (AI) systems hold great potential for tackling common security issues, according to a new Euro Banking Association (EBA) report.
The EBA’s Open Banking Working Group focused on collaboratively created systems, which could unlock solutions for common issues such as fraud prevention and cyber security. For example, AI could detect security threats across institutions and jurisdictional boundaries, thus improving the overall efficiency and resilience of the financial system at large, the report explained.
“If you bring together the data sharing opportunities unlocked by Open Banking with the insights and decision-making capabilities enabled by AI-supported data analytics, you end up with a powerful combination that could revolutionise the financial sector,” said Vincent Brennan, chair of the working group.
“This could be a real game-changer for many of the collective challenges we are facing as an industry, from security issues to regulatory reporting,” he continued, adding: “There are quite a few hurdles to overcome and joint standards to be agreed on, but since there is a lot to be gained, market players should seriously consider looking into these opportunities.”
Data sharing in the context of Open Banking, combined with AI, can improve the efficiency of operations and decision-making, especially against the background of the General Data Protection Regulation (GDPR) and the revised Payment Services Directive (PSD2), the report stated, noting that the impact of AI on financial services can be seen in three strategic areas: processes, products and services, and markets.
The report stated that adoption of AI is being held back by several organisational - availability and accessibility of data, competent resources in this area and cyber security - and societal challenges - bias, transparency, liability - that could be tackled collaboratively.
“Currently, AI is mainly used in the competitive space to create leaner and faster operations as well as tailored products and services,” it read. “However, AI could be used collaboratively as well to create a more secure and efficient financial system, e.g. by identifying patterns of threats that cross institutional boundaries.”
If financial institutions want to realise this potential of collaborative AI, they need to leverage the data made available and accessible through Open Banking, the EBA explained.
“Therefore, efforts to standardise APIs across the EU need to focus on increasing the functional scope and the quality of the data available, so that AI can be used to transform these data into valuable insights.”