How Has AI And Cybersecurity Affected The Fintech Industry?
It isn’t a miracle anymore. AI is increasingly being woven into the fabric of business and is being utilized in a wide range of applications.
As per recent global research of over 4,500 technology decision-makers from various industries. 45 percent of major corporations and 29 percent of SMEs have implemented AI.
The FinTech industry is known for its high level of innovation within a complex ecosystem. Which includes banks, financial service providers, and start-ups, among others.
Not surprisingly, it has leaned significantly on artificial intelligence (AI) and machine learning (ML) in recent years for strategic decision-making, customer insights, consumer purchasing behaviour. And improving the digital transaction experience.
Financial technologies in the FinTech ecosystem, on the other hand, are driven by massive amounts of data. This, combined with the inherent flaws in new technologies, makes the business a desirable target for cybercriminals. The sector offers a unique threat to data subjects’ rights and freedoms. As well as their financial assets and, potentially, their financial well-being.
The interplay of AI and cybersecurity
Both AI and machine learning have the potential to make transactions easier and improve the overall customer experience. However, in addition to improving the user experience, these two technologies are also assisting in the enhancement of cybersecurity. And the avoidance of vulnerabilities through proactive processes and measures.
In the banking and financial industry, the relationship between AI and cybersecurity can be divided into two dimensions:
Offensive AI usage:
Cybercriminals utilize AI to identify and detect passwords or user credentials, as well as to exploit photographs and audio. All of which can be used to commit identity fraud or theft, carry out more real phishing attacks or even create new types of malware.
This necessitates cybersecurity to both prevent abuse (e.g., hacking or manipulation of AI algorithms or data processed by AI algorithms) and to include mechanisms to ensure consumer safety and effective reparation for victims in the event of injury, as well as to mediate investigations if the AI system is compromised.
As an example, the European Commission has proposed that cybersecurity requirements for AI be codified under the proposed European Cybersecurity Certification Framework. It has been noted that for “businesses acting in security-relevant fields (e.g. financial institutions, producers of radioactive materials, etc.) the use of certain AI products and processes serves the public interest and thus their use may be made mandatory.”
But building confidence in AI requires a sufficiently safe and responsible framework.
Defensive AI usage:
Here, artificial intelligence is used to combat cyber-attacks:
Artificial intelligence (AI) is assisting under-resourced security management strategists in keeping up with the latest developments as the volume and complexity of cyberattacks rises.
Artificial intelligence (AI) technologies such as machine learning and natural language processing, which curate security intelligence from millions of research studies, articles, and news headlines, provide rapid insights to cut through the din of everyday alarm, enabling significant diagnostic capabilities that analyze massive amounts of data and reveal hidden patterns and anomalies.
Processing Sensitive Financial Data
Artificial intelligence is being used to discover fraudulent activity, suspicious transactions, and generally offer a boost to processing sensitive financial data – all with a reduced risk of security risk – thanks to its capacity to discern trends and suspect behaviours.
This is especially important for central banks, where the flexibility and real-time availability of big data allow them to extract more immediate economic signals. Use new statistical approaches, improve economic predictions and financial stability assessments, and get quick feedback on policy implications. But where public statisticians are prone to be “cloud computing-averse” due to privacy concerns.
Tailored customer segmentation
AI overcomes the limitations of traditional market segmentation by analyzing cyber-secured client data to develop more targeted, multiple customer segments for financial companies. It goes even further by customizing campaigns for each transaction category. And fine-tuning marketing efforts for each channel by adjusting the variables involved. Customers benefit from personalized offers, while banks benefit from increased conversions.
While new malware strategies will continue to emerge. There are immediate lessons to be learned and proactive activities that businesses can take to ensure their operations remain resilient to cybersecurity attacks. FinTech business models will need to use appropriate cyber protection. And data security solutions in the future to overcome risk challenges, comply with government laws, and gain client trust.
However, the time to act is now to construct this future!
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