Gen AI: Regulatory and Implementation Challenges
At the MoneyLIVE Summit 2024 in London, Red Hat’s experts, Richard Harmon and Monica Sasso, discussed the evolving role of Generative AI (Gen AI) in the banking sector. Richard Harmon, Red Hat’s VP and Global Head of Financial Services acknowledged the ongoing hype around Gen AI, predicting that its widespread adoption will take time as banks navigate regulatory landscapes and identify optimal use cases.
In Europe and the UK, banks using Gen AI must adhere to the newly enacted EU-AI Act, classifying applicatons AI in banking as ‘high risk.’ This includes AI-driven creditworthiness assessments and risk evaluations, necessitating strict compliance. Harmon emphasized the importance of correct implementation to avoid severe regulatory consequences. Initially, banks might focus on non-sensitive applications of Gen AI, such as advanced natural language processing, to derive immediate value without regulatory hurdles.
One notable example is Banco Galicia in Argentina, which utilized predictive AI and natural language processing to streamline corporate onboarding. By digitizing and analyzing paper documents swiftly, the bank significantly reduced processing times. Harmon highlighted that Gen AI could further enhance such processes, offering more personalized and accurate customer experiences.
Gen AI’s Role in Enhancing Cybersecurity
Monica Sasso, Red Hat’s Global Financial Services Digital Transformation Lead, pointed out the vast potential of Gen AI in banking, automating cybersecurity operations. She noted that AI has been integral to real-time banking functions for years and that integrating AI with threat-hunting software could automate numerous cybersecurity tasks.
With financial institutions like JPMorgan facing up to 45 billion hacking attempts daily, AI-driven cybersecurity becomes crucial. Red Hat collaborates closely with banks to implement AI tools that enhance operational resilience and speed up processes like Anti-Money Laundering (AML) efforts. Sasso stressed the importance of integrating these automated tools into the bank’s main systems to ensure immediate response to threats, even during off-hours. Advanced solutions like Red Hat’s Ansible Lightspeed, in conjunction with Advanced Cluster Security, enable banks to automatically thwart potential threats, ensuring system continuity.
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Upskilling and Modernizing Banking Infrastructure
Addressing the need for simplicity in AI applications, Sasso highlighted the importance of upskilling the workforce to meet modern technological demands. She argued that understanding the intricacies of AI and its impact on various processes, such as risk management, is vital. Outsourcing to third parties without comprehensive knowledge can introduce new risks, underscoring the necessity of expertise in managing these challenges.
Sasso emphasized the need for banks to be aware of their software supply chains and ensure the security of their code bases. Red Hat is committed to educating clients on these aspects to help them maintain control and mitigate risks as technologies evolve.
Modernizing AI in banking infrastructure is a gradual process, essential for integrating new technologies with legacy systems. Red Hat’s OpenShift platform has been instrumental in helping banks containerize and modernize their software, facilitating a smooth transition to cloud-native systems. Harmon noted that hybrid multi-cloud services reduce technology duplication and streamline operations, allowing banks to deploy applications enterprise-wide with minimal technical burden.
In conclusion, while Gen AI holds transformative potential for AI in banking and financial services, its successful integration requires a deep understanding of regulatory requirements, robust cybersecurity measures, workforce upskilling, and gradual modernization of infrastructure. Red Hat’s ongoing efforts to support banks in these areas highlight the critical steps needed to harness the power of AI effectively.
