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The Dual Face of AI: A Risk and an Opportunity for Business in Every Sector
November 29, 2023
In today’s rapidly evolving landscape, the integration of Artificial Intelligence (AI) into various sectors is proving to be both a challenge and a boon for businesses. The pervasive influence of AI presents a unique duality – representing both a risk and an opportunity for enterprises across diverse industries. In this era of fast-paced, intricate, and data-centric operations, AI offers the potential for businesses to accomplish more with fewer resources, adapt swiftly to changes, and provide cutting-edge services, detection mechanisms, and protective measures. This transformative capability not only bolsters risk management but also ensures compliance in an ever-changing environment.
A recent study by Moody’s sheds light on the adoption and readiness of AI in risk and compliance, with fintech emerging as the frontrunner. Approximately 18 percent of fintech respondents actively utilize AI, doubling the percentage observed across all surveyed sectors (9 percent). Fintech harnesses the power of AI to identify threats, prevent fraud, automate routine tasks, and elevate service quality.
However, sectors like insurance, asset management, and wealth management exhibit slower AI adoption rates. Only 3 percent of respondents in these areas currently use AI, with an additional 11 percent in the pilot phase. Banking closely trails fintech, with 12 percent of respondents actively incorporating AI.
AI technology manifests in various forms, from machine learning to robotics and generative AI. Its impact on risk management and compliance is particularly pronounced in three core areas: transaction monitoring and risk detection, individual and entity profiling with screening, and the automation of manual tasks for efficiency improvements.
While AI’s integration into risk and compliance is still in its early stages, the banking and fintech sectors lead the charge, with 40 percent actively using or piloting AI. Larger companies show a higher inclination towards AI adoption, with 42 percent compared to 23 percent in smaller companies, highlighting the ongoing shift in the technological landscape.
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