Principled AI key to transformation of financial services

Companies must be transparent and fair to maintain trust and mitigate reputational risks.

Companies in financial services should have a clear governance structure to monitor progress and compliance with their artificial intelligence (AI) strategies to ensure the technology really transforms their operations, according to a KPMG Philippines official.

They should also train their people in AI before deciding to scale it across the entire organisation, Emmanuel Bonoan, vice chairman and COO at KPMG R.G. Manabat & Co., the Philippine member firm of KPMG International, told the recent Asian Banking and Finance Forum in Manila.

The use of generative AI (genAI) solutions in financial services raises governance and regulatory compliance issues. Institutions must ensure transparency and fairness in the decision-making process of their genAI systems whilst complying with the rules.

Bonoan said organisations should experiment with AI responsibly. “Dip your toes into the AI waters, [and] don't adopt it wholesale. Find sexy use cases to start playing around with AI.”

He also said companies should have accurate and reliable data in place before building AI models. “Running AI on inaccurate data can lead to serious problems, risking reputation and bringing in regulatory authorities to put pressure on you.”

He said a structured testing and validation process is key to continuously assessing the results of AI systems within specific use cases. “You identify the positive outcomes and benefits and resolve any problems.”

He said teams should have the technology and ability to integrate AI in existing processes for the best outcome whilst ensuring that people are equipped with the right skills.

AI strategies should also be communicated clearly.

“Confirm that you have the right people and the right strategy in place, and that this is communicated across both key stakeholders and the wider business,” he said.

“For example, when we make an opinion assisted by AI, we put a disclaimer saying parts of this opinion have been generated using AI. However, an actual person reviewed this and made sure that it is accurate.”

Bonoan said a number of organisations have been using AI to provide new services and enhance back office processes. Six in 10 global technology leaders in financial services think genAI and machine learning could help them hit their short-term goals, according to KPMG’s global tech report.

He said financial services, wealth management, and the banking sector should not feel pressured to adopt AI just for the sake of it.

“Risk processes are a great use case for artificial intelligence,” Bonoan said. “Understand the business outcome you want to achieve, and then consider how you can use genAI to help solve these problems.”

He said management should look for big impacts at the enterprise level rather than focus on siloed use cases. It should give a company the opportunity to rethink how to operate its business.

He said young workers are driving the push for innovation, which is key to staying in business.

“I'm blessed to be part of an organisation whose average age is 28 to 32 years old,” he said. “Because of that, everyone is looking for innovative products and processes.”

“It's worth taking a step back from the hype to really understand what genAI is, what it can do, and the risks and opportunities involved. It is a key part of society, where people and machines can work together,” he added.