Take a look at the world around you for a moment: its fast pace and the systems that keep it running smoothly. AI is part of our social norm, and often, we don’t even know it. The fact that we are barely conscious of these systems is a testament to their positivity and productivity. After all, we are often only aware of the inner workings of a machine when it breaks down.
We cannot underestimate the growth of AI as an independent entity in our lives. Industry 4.0 is here, bringing systems and appliances striving to make life easier in a multitude of ways – think smartphones, home appliances, traffic-flow management, healthcare, and even transportation. The financial sector is no different and is a major driving force in AI development.
In the US alone, according to Autonomous Research, “over $1 trillion of today’s financial services cost structure is exposed to replacement by machine learning and AI.” This will bring a reduction of 22% on traditional costs–and this is just at the process end.
How artificial intelligence is helping big and small businesses in Southeast Asia
When considering criminal activity, the sheer number of transactions, coupled with sophisticated tactics, has many financial institutions implementing AI measures to fight fraud. AI has been used in finance for years, but the current seismic shift indicates the breadth of the current uptake of AI across the sector. Reducing the impact of online crime—predominantly fraud—and potentially saving billions of dollars for the companies utilising this rapidly growing resource, is the main driving force.
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AI is creating more than just a set of banking services; it is developing an entire ecosystem. Targeting fraud, assessing or managing creditworthiness, identification, and the automation of claims cases are increasingly the norm. AI-run ‘chatbots,’ and ‘virtual assistants’ improve the user experience and streamline processes, making it more time- and cost-efficient for individuals to manage their finances.
The AI process has three essential components: learning, predicting, and acting. And AI can do this autonomously, automatically, accurately, and at rapid speeds.“Fast and frictionless” is not only the desired user experience but the financial services mantra, as well.
Visa, possibly the oldest and most recognisable household name in card transactions across the globe, has recently released figures for their Visa Advanced Authorisation (VAA) process, called Visanet. Mark Nelsen, Senior Vice President of Risk Products and Business Intelligence, Visa, Inc., announced, “Advanced Authorization prevented an estimated $25 billion in fraud (for the 12 months ended April 30, 2019) while processing more than 127 billion transactions in 2018.”
Modelled on the neural networks of the human brain, Visanet processes more than 500 unique risk attributes analysing the likelihood of someone other than the authorised card owner making the transaction.
Impact on productivity: fraud and the financial markets
Risk and compliance are multi-billion dollar areas. Anti-fraud, credit scoring, and know-your-customer (KYC) are three massive interlinked categories where AI has a starring role. Since paper identification is no longer necessary, KYC works with facial recognition, and digital location to reduce human error.
Information sources, including social media, are improving things as credit scores become more accurate, based on people’s situations rather than general demographics. AI tech combats fraud, money laundering, and the funding of terrorism, increasing financial institutions confidence and making them better equipped to manage risk exposure. Tracking issues in real-time makes it easier to stop criminals from gaining access to accounts and completing unauthorised transactions.
Impact on the ‘Credit Invisible’
Until recently, building credit was challenging. Credit scoring and creditworthiness focused on general exposure to risk, and loan refusal was common due to risk aversion.
In Southeast Asia, a lack of access to financial institutions led to a large number of people being “credit invisible.” Now, as a result of AI’s ability to assess and score risk more efficiently, this is changing. The interconnected nature of digital-lending platforms and AI allows information from tech companies, and even social media, to be shared and enable a unique, individualised level of assessment. Increased financial inclusion brings positive social outcomes and enhances the ongoing growth of the region’s economy.
Research and development
Among the first to benefit from AI, banks and financial institutes have been a critical component in its research and development. Their level of interest, however, has the potential to skew developments in the field as they finance and develop it to their benefit Another issue is that the lack of tech specialists and developers may potentially slow the growth of financial institutions and new AI-supported startups in Southeast Asia.
The impact of AI on the marketing industry
AI in Southeast Asia and the global skills crisis
The rise from 8% to 14% during 2018 was a clear indication of Southeast Asia’s commitment to the AI market. Nearly 25% of all organisations in Indonesia have adopted AI into their business strategies, followed by Thailand at 17.1%, Singapore at 9.9%, and just over 8% in Malaysia. However, to keep the current momentum, the bottleneck of skill, demand, and capacity must be addressed.
According to Clarivate Analytics; 29,730 AI-related papers were generated and published by Southeast Asian countries since 1985, with the majority of them from Singapore (11,226). Malaysia and Thailand followed close behind with 9,948 and 4,116; respectively. These three countries have produced 84% of the regions AI research material as of December 2017. And we can be sure that new data will continue to show a sharp increase in those figures.
Tencent Research Institute produced a report in 2017 concerned that despite the millions of openings for employment across the globe, there were currently only 300,000 general AI researchers and practitioners to manage the ever-growing demand in this field.
However, more recent research by Element AI CEO JF Gagné found that “22,400 people published at one or more of the top conferences in the field of machine learning in 2018, up 36% from 2015 and 19% from last year alone. The number of peer-reviewed publications rose in tandem, up 25% from 2015 and 16% from the year before.”
The skills shortage has been a cause for concern, and AI specialities in major Southeast Asian universities are still developing. Companies and governments may have to recruit from the ‘dark web’ and ‘captured’ hackers, bridging the skill gap by whatever means necessary.
Experts see Technological readiness through AI uptake as an indicator of future competitiveness in the global market, for big business and whole-nation economies alike. To continue this rise, Southeast Asia will need to supercharge its AI capabilities and future-proof its current assets. The AI age is not coming: it is well, and truly here.