Griffin Bank is a full-stack banking-as-a-service platform, managing complex financial infrastructure and compliance requirements for businesses. We spoke to Griffin’s Head of Financial Crime Product, Kathryn Sharpe, to get her view on how AI will both benefit and challenge the financial services sector.
“I think we've been in a space for quite a long time where getting access to banking hasn't been easy for everyone,” says Kathryn Sharpe, Head of Financial Crime Product at Griffin.
Kathryn is enthusastic about the democratising effect of open banking and online banking services, freeing people of the need to go into a branch or jump through unnecessary hoops to open an account. However, she recognises that this brings its own challenges.
“Obviously, ease of access can also mean that if you don't have the right controls in place, that can be more attractive to criminals,” she says. “I think it's just about adapting to that.”
One of the ways to adapt, which is a hot topic in the fintech world as in almost every sector, is by using artificial intelligence (AI).
The benefits of AI for financial services
Kathryn sees an increasing acceptance across the fintech sector that to stay ahead – or even just to stay in the game – businesses will need to make use of AI.
“We're very much moving past the point, I think, where we can say it's not needed,” she comments. “Whether it's for transaction monitoring, or risk assessment, I think there's a recognition of the power that AI can bring.”
Fraud is a huge issue in financial services, and Kathryn believes AI will have significant implications for the ability of online banking providers to manage and address the problem.
“A lot of financial crime is around trying to understand that bigger picture,” she says. “As soon as we can start to see that in a more meaningful way and be able to home in on where an investigation is actually useful, then the more power we can bring to customers. If we're able to actually spot unusual activity, see how it manifests and then take measures to prevent it, that's going to be something really powerful that we can offer.”
As in other sectors, she also believes AI will be immensely beneficial in terms of productivity and efficiency.
“I think it has a really powerful ability to automate processes that typically have generated a lot of manual work. And I think what it will enable is people to really focus on where it's meaningful.”
However, she cautions against seeing AI as a complete solution to addressing financial crime.
“It's also about not seeing it as a magic tool. It's not going to solve every problem. It will create problems of its own,” she says. “I think it's very much about using it in a way that's meaningful and well thought through. We need to be able to explain how we're making decisions, how we're reaching outcomes. That's a part that regulators are really starting to focus on. I know the EU at the moment is trying to push through an AI act. And it'll be interesting to see what path the UK goes down.”
The challenges of AI for financial services
As Kathryn points out, while AI promises to deliver significant benefits in the financial services sector’s drive to address fraud, it’s also an innovation that’s being rapidly and enthusiastically embraced by criminals.
“I think generative AI is going to be really powerful (for bad actors), and it's already been really powerful – for creating deep fakes, and for generating texts to create a bunch of applications really quickly.”
This creates something of an arms race between financial fraudsters on one side and financial services businesses on the other. Unfortunately, it’s a race in which bad actors, who are much freer to ‘move fast and break things’ as the saying goes, inevitably have a head start.
“Whilst we're going to have an ability to use AI in a much more meaningful way in terms of spotting patterns and being both proactive and reactive, we're going to have to put in changes much more slowly, probably, than criminals are able to,” says Kathryn.
“I think there's going to be a balance over the next few years between how to ensure financial services businesses are using AI in a way that's safe, and fair as well – it's not introducing discrimination or bias – and then also trying to keep pace with criminals.”
How Griffin is addressing the challenges – with Veriff’s help
Overall, Kathryn is clear that while artificial intelligence is set to become a vital tool for countering online fraud, AI alone can never be the whole answer.
“You could have the most amazing outsourced AI system, but if it doesn't play into your broader control framework – if it's something people don't understand, or it's niche, or it's not in a single system - is that actually going to bring value? Or is that going to detract from what you've got and cause confusion?”
Instead, AI needs to be integrated into systems and processes that form part of a full-spectrum anti-fraud approach. At the core of Griffin’s anti-fraud measures is its onboarding tool, Verify, for which Veriff provides the identification and verification element.
“Partnering with Veriff was a really great addition to the product that we were building because it very seamlessly fit into that journey and what we needed,” comments Kathryn. “The fact that you can offer different kinds of risk labels was a really great addition to what we were looking for, because we could make sure that we were really able to assess the nuances of the financial crime risk, rather than it being a binary thing.”
“And then also that in doing that customers weren't impacted; we weren’t putting them through a process that was super long or difficult.”
“We saw this really great opportunity to collaborate in providing that kind of overall experience, but focusing on the area that we knew we could do really well, and then being able to take the product that you have and integrate that in a way that complements what we're doing already.”
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