More financial companies are now jumping into the AI train in an attempt to address operational inefficiencies, particularly in Know Your Customer (KYC) processes.
The integration, and sometimes the replacement of AI system, to this mandated procedure is expected to save companies at least $150 million each year, VentureBeat reported.
AI and learning machines have been proven to resolve longstanding issues in KYC's key compliance functions, including security, risk management, operation inefficiency, and overall customer experience.
What is KYC Processing: Advantages and Risks of Using AI
KYC, at its core, is a regulatory requirement for companies and financial institutions to verify the identity and accommodation of their customers.
The procedure often takes up a lot of documents and time due to the customer identification, risk management, and monitoring needed to accomplish the process.
The lack of integration and information flow into departments handling KYC has often led to operational inefficiencies and delays in decision-making.
One of the often-raised advantages of AI in this situation is the automation of documenting and monitoring customers, reducing the need for manual data recording and extraction.
For companies to succeed in developing AI-powered platforms can mean a single unified center across multiple data sources, decision-making assistance, and a streamlined customer approach.
While all of these are beneficial to the company, the introduction of AI can also signal further layoffs as financial institutions try to cut costs in favor of developing more learning machines into their workforce.
Reports of big firms closing down hiring processes have become more common as some positions were deemed redundant and can be replaced by much cheaper AI labor.
Future of AI, Learning Machines in Financial Institutions
Financial regulators have also warned banks and firms of the security and system risks of relying most work on AI as it remains more vulnerable to system errors and exploitation by bad actors.
As it stands now, there are still a few unified regulations and principles on using AI in the finance industry.
Lawmakers continue to push for a blueprint to fully monitor the development of AI in the country.
