The healthy development of Southeast Asia’s financial system is inseparable from artificial intelligence, Charles Zhang says
26 July 2019

On 24 July, the “WORLD AI SHOW”, which has a high impact in the global artificial intelligence field, was held in Singapore, the fintech hub of Southeast Asia. Representatives of governments, enterprises and more than 300 senior experts in the AI field from many countries gathered to discuss the revolutionary applications. ADVANCE.AI, an AI company which has been deeply engaged in the Southeast Asian market for many years, was invited to attend the conference. Charles Zhang, the Asia-Pacific general manager of ADVANCE.AI, shared a keynote speech on the topic of “Artificial Intelligence is the Key to Improving Productivity and Risk Management in Financial Services in Southeast Asia.”

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Singapore is one of the few countries with a high penetration of AI applications. A survey revealed that 50% of Singapore’s telecom, insurance, finance, IT and retail industries have already adopted AI technology, with another 31% that have yet to do so also planning to roll out in 2019. The relevant departments in Singapore predict that by 2035, the total output value of AI applications in 11 key industries will reach $215 billion. There is no doubt that the financial industry is one of the most critical application areas of AI, especially in Southeast Asia.

The global financial industry lost £3.24 trillion ($4.04 trillion) to fraud in 2018, which is equivalent to the GDP of the UK and Italy combined, according to research data from tax and advisory firm Crowe Whiteclark Hill. The Southeast Asian market is a high incidence of fraud. In April, global payments network Swift found that 83% of all fraudulent transactions studied last year and this year were funded through Southeast Asian banks.

Charles Zhang said: “AI technology will not only significantly increase productivity to future economic growth, but also become a key technology necessary for banks, credit and other financial institutions in their pursuit of risk aversion and compliance guarantees.”

Fighting fraud is the priority of banking

Fraud is a particularly thorny issue in Southeast Asia, and anti-fraud is the most prominent issue facing major banks, credit institutions, etc.

Southeast Asia is vulnerable to “fraud risk” for two main reasons: one is the difficulty of users’ identification, and the other is the difficulty of checking the creditworthiness of users.

For example, identification issues, as the quality standards for ID cards currently in use in some areas of Southeast Asia are not uniform. It will be instances where identity information is copied, and multiple SIM cards will be configured with multiple identities. The risk of fraud by “non-compliant users” will increase if the financial institutions improperly identify users.

In terms of credit investigation, it is difficult to achieve unified, centralized credit management due to the low holding rate of credit card, lack of information between institutions, resulting in the absence of relevant technology and data during risk control and credit investigation. The financial system in Southeast Aisa started late as well. At the same time, it is hard to know the existence of the common multisource lending situation among users. As a result, financial institutions are unable to make an accurate determination of the applicant’s ability to repay and their risk profile. However, with the gradual rollout of innovative AI technology in financial institutions, the success rate of fraudsters has been significantly reduced.

“Anti-fraud” at the root of the problem

The power of AI technology to help financial institutions achieve risk aversion and compliance goes straight to the root of the problem: Know Your Customer (KYC) and credit scoring. In short, a strong “anti-fraud” barrier can be erected as long as we can accurately identify users and know their creditworthiness.

In terms of KYC, face-to-face authentication is being replaced by AI-driven facial recognition technology, which not only eliminates the need for manual authentication, but also reduces errors, streamlines the process, and saves costs.

Currently, ADVANCE.AI’s Digital Identity Verification solution includes OCR (Optical Character Recognition), Liveness Detection, Face Comparison, and Risky Faces services. OCR can recognize the applicant’s ID card information and compare it with the official database; perform liveness detection simultaneously, and compare the face recognized from the liveness detection with the face on the ID card to determine whether they are consistent. With this overall solution, it is possible to determine whether the applicant is him or herself, whether he or she has a legal identity, and make risk control decisions.

AI technology is also capable of instantly cross-checking blacklisted data across multiple judicial data sources. Any identity that has a history of “fraud” in the past can be marked as a risk by the system, allowing financial institutions to take precautions.

In terms of credit assessment, AI has also surpassed traditional modelling methods to provide a more comprehensive risk assessment profile.

The scoring system of ADVANCE.AI, which includes Credit Scoring, Fraud Scoring and Multisource Scoring, is using advanced machine learning methods and combined with rich data resources. It provides a comprehensive and multi-dimensional assessment of individual credit risk. The scoring product form of ADVANCE.AI, in addition to specific credit scores, significant features that are important in the modelling process and help credit institutions make better risk assessments and decisions.

Based on several years of practical experience, following the gradual application of AI “anti-fraud” technology, fraudulent behaviour is gradually decreasing in the region most affected by credit fraud.

Serving “credit invisible” compliant “new users”

For financial institutions, the purpose of “anti-fraud” is to keep dangerous users with “fraudulent” motives out of the safe zone but to improve the level of financial business. It is necessary to continuously attract new users with security compliance. AI can also provide excellent support in this regard.

Relying on advanced big data technology, financial institutions can achieve accurate identification and verification of user identity information. It allows banks to have a more accurate assessment of the risks of all individuals and institutions before approving loans or credit card.

At the same time, the introduction of AI-related methods has made it possible for credit scores to determine the creditworthiness of users accurately, and individuals and small businesses that were previously underserved can be better served now.

Thus, in addition to risk and compliance, AI can indirectly help financial institutions address the challenges posed by the “invisible credit” customer groups (unbanked and underbanked customers). The increase in compliant users will further improve the performance level of financial institutions.

For these reasons, Charles Zhang believes that AI is integral to the healthy development of banking and financial services in Southeast Asia.

Currently, ADVANCE.AI has served hundreds of enterprise-level customers and hundreds of millions of product calls in Southeast Asian countries such as Indonesia, Philippines and Vietnam, and has completed a strategic layout in the Indian market. By virtue of its heavy accumulation and innovative R&D capabilities in the field of risk control technology, as well as its rich experience in landing in overseas markets, the services of ADVANCE.AI have covered a wide range of fields such as internet finance, banking, e-commerce, ride/car-share and other fields.


Release channel: Guangming Online


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