Using AI aims to save the bank millions in efficient and automated data analysis
HSBC has joined forces with artificial intelligence (AI) specialist Ayasdi to find ways to make its compliance processed more efficient through automation.
The Silicon Valley startup’s technology will be implemented into HSBC’s systems with the aim to aid the anti money-laundering investigations the banking giant carries out.
Such investigations involve trawling through masses of complex data and workflows, which have traditionally required thousands of people to sift through financial information to spot suspicious activity.
However, according to Ayasdi, such investigations do not always reveal evidence of money-laundering, and often throwing up ‘false positives’ that require a deeper review but do not end up yielding suspicious activity, resulting in wasted human resources for HSBC.
Yet, if this activity is not carried out, money-laundering could slip through the net and see HSBC hit with fines from governments with increased regulatory requirements aimed to stamp out the financial crime.
“At the heart of the problem is the balance between signal and noise. Too much noise in the form of false positives increases costs for the bank as they need to investigate the suspicious activity reports. Too little signal means that the bank might miss criminals triggering a number of negative regulatory outcomes ranging from fines to physical observation,” said Jonathan Symonds at Ayasdi.
“There is an opportunity to apply sophisticated techniques from AI to this mission-critical regulatory function that can dramatically improve efficiency while simultaneously reducing regulatory exposure,” said Symonds.
In a twelve week pilot carried out by HSBC, Ayasdi’s AI technology was able to achieve a 20 percent reduction in false positives while maintaining the same number of reports of suspicious activity for human review.
Ayasdi and HSBC will look to evolve the success of the pilot, with the project claimed to be saving the bank tens of millions of dollars per year; the actual savings and return on the investment HSBC made to bring Ayasdi into the fold are confidential.
Automation does have its shortcomings if the lack of human oversight leaves errors to go rampant, but the benefits of applying smart systems to workloads that often require tedious activity for humans are becoming more apparent.
HSBC is likely to keep pushing its use of AI and automation technology, especially given it has embraced the Google Cloud to assist its big data analytics and additional money-laundering detection.