AI in Banking and Financial Services (AML)

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Recently HSBC announced that it is implementing AI technology to automate AML investigations – (Source: Reuters 01-June-2017)

Similarly, many more banks have started using AI technology in various fields. Since most of us are aware about Machine Learning (ML), Artificial Intelligence (AI) and Robotic Process Automation (RPA), we will not delve into the same.

In general, earlier technology products only offered solutions based on the fixed set of rules, e.g. If X event happens then do this, else do that. However, in AI, products develop repository rules of their own based on the huge volume of data, also known as pattern recognition. So, decision making on basis of pattern recognition has lots of scope in banking and financial applications. Some of the areas in banking where AI is being used extensively are:
• Anti-Money Laundering (AML) Pattern Detection
• Chat Bots
• Fraud Detection
• Stock Trading
We will only cover AML Pattern Detection in this series.

AML pattern Detection: Earlier detection of Money Laundering involved monitoring of bank accounts by its staff.

Reference Site:-


Let’s understand evolution of AML with the help of an example:

Pre computerization era: Earlier cashier used to report if unusual amounts of transactions start taking place in customer’s account. Risk and compliance department used to investigate and monitor accounts and put forward the recommendations like account closure or close monitoring or reporting to concerned legal authorities.

Computerization Era: Then arrived the software products which used to trigger alerts on the basis of certain events such as high cash deposit, rapid movement of money between multiple accounts, and so on. Now other than Bank staff computer too was alerting Risk and compliance team.

AI Era: In above case computers generated only alerts based on events and hence lots of false alerts were being generated. E.g.: There were many business organizations like restaurants whose nature of business involved heavy cash handling. In such cases system ended up generating alerts for such accounts although humans (bankers) could easily judge that there is no anomaly in such cash deposits given the nature of business of restaurants where transactions are mostly in cash.

What was missing was the ability of computers to take judgement calls based on the patterns and the past history. Now this piece is falling in place with the help of AI, and banks are expecting not only to reduce false alerts, but, also catch those cases where transactions are below thresholds but don’t fit into the pattern. A typical system flow is as under:


Thank you for reading this blog. Please standby for our next Blog on AI in Banking – Chat Bots.

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One comment

  1. Very well explained and written about chatbots and AI. It was quite helpful indeed. Not only does financial services, but other industries also benefit. A little more business integrations and better customer experience will work out wonders. I came across a chatbot platform called Engati which guided me to design a chatbot within 10 minutes and no coding. You too can give it a try at building a bot in less than 10 minutes. Engati is a chatbot platform that allows you to build, manage, integrate, train, analyze and publish your personalized bot in a matter of minutes. It presently supports eight major messaging platforms including messenger, Kik, telegram, line, Viber, Skype, slack and web-chat with a focus on customer engagement, conversational commerce, and customer service and fulfillment.
    Read more about it here

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