HKMA Report: Application of AI is critical in revolutionizing banking
THE FUTURE of business and financial operations is seemingly momentous with the rise of viable digital solutions and technological advances – all aimed at scalably improving work processes and enhancing services.
Banks, in particular, have to adopt a digital mindset and be more proactive in being more technologically-enabled because they are instrumental in standardizing financial services and fostering economic growth.
The Hong Kong Monetary Authority (HKMA) has released a report on how AI is positively becoming a critical disruptor in banking operations and services.
The fact that the intelligent, self-learning machine is an incredible solution with a wide range of tailored applications to help improve banking and take operations to new highs has served to be a motivation for the study.
Most importantly, the report explores the rate of AI adoption among Hong Kong banks, its application in banking, the challenges and considerations that follow, the latest AI development trends in banking and the overall possibilities of the technology.
It was also projected that the technology will have an economic impact equivalent to US$15.7 trillion by 2030.
With the report, HKMA aims to drive the adoption rate of AI in the banking sector as there is an increasing need for financial services and banking operations to deploy AI solutions.
This is because it has been noted that the advances made alongside the technology have been rather modest, so it is important that the sector is motivated to embrace the technology productively.
However, the overall outcome is noticeably positive and it started strong with Hong Kong banks revealing that a majority – precisely 89 percent – has adopted or plans to adopt AI solutions.
Ninety-five percent of the banks that have deployed AI solutions have also reported that the capabilities of the technology have been used to structure corporate strategies – further marking the profound role of intelligent machines in revolutionizing financial operations.
Several factors have also been outlined to reflect the growing necessity of AI adoption in banking which includes the need to be more cost-effective, better management of risks and customers’ demand for a more personalized and enhanced banking experience.
Nevertheless, the barriers that banks have reported to experience have been highlighted in hopes that it could prepare others in their AI adoption journey as well as encourage solutions to be developed to counter the challenges.
Among the barriers are the lack of AI expertise, explainability of AI, ethical design of AI, poor volumes of data input, data security and privacy as well as the legal compliance challenges that follow.
Albeit, the report addressed how these challenges serve as opportunities for the industry to develop a more holistic understanding of AI and to be more transparent with how it is designed to come up with solutions.
It is undeniable that despite all the barriers that have been reported, the attitude and acceptance of AI solutions is generally promising and encouraging.
Going into the future, the banking sector needs to collaborate and align efforts with technological companies as well as government bodies to develop more directive development plans with AI – while also resolving the barriers reported.
The report is expected to significantly help Hong Kong’s banks to gain an awareness of AI developments and also help neighboring regions chart plans to endorse the technology.