Banks should come together to develop an artificial intelligence (AI) system to help solve security problems afflicting the industry, according to a recent report by the Euro Banking Association (EBA).

Many of the security issues facing banks, including fraud and cyber security, are dealt with by individual organisations. However, in the age of Open Banking, a collaborative effort would mean a far more efficient and consistent approach to such issues. And with AI becoming increasingly advance, banking data could be analysed across multiple institutions and territories to prevent security threats.

The report, Artificial Intelligence in the Era of Open Banking, was put together by the EBA’s Open Banking Working Group and published shortly before the organisation’s EBAday conference in Stockholm on 18-19 June.

“This could be a real game-changer for many of the collective challenges we are facing as an industry, from security issues to regulatory reporting.”

It states that banks have so far only been using AI to streamline and improve their individual operations, but the technology could have a greater benefit to the wider industry if institutions worked together. “Currently, AI is mainly used in the competitive space to create leaner and faster operations as well as tailored products and services,” the report states. “However, AI could be used collaboratively as well to create a more secure and efficient financial system, e.g. by identifying patterns of threats that cross institutional boundaries.”

Greater insights

The group’s chair, Vincent Brennan, said that sharing data across institutions could mean much greater insight into the sort of threats all banks are facing. “If you bring together the data sharing opportunities unlocked by open banking with the insights and decision-making capabilities enabled by AI-supported data analytics, you end up with a powerful combination that could revolutionise the financial sector,” said Brennan.

The shift towards collaboration has accelerated, largely thanks to technological innovation. Open banking has played a big part in that, helping boost transparency across the industry. Taking this one step further with AI could dramatically reduce the security risks that customers face, adds Brennan.

“This could be a real game-changer for many of the collective challenges we are facing as an industry, from security issues to regulatory reporting. There are quite a few hurdles to overcome and joint standards to be agreed on, but since there is a lot to be gained, market players should seriously consider looking into these opportunities.”

How are advisers growing their businesses digitally?

Financial advisers warned over cold-calling rise

How to embrace technology in the financial advice arena