Machine Learning on the Rise in Financial Services
A Bank of England (BoE) report has found that the use of machine learning (ML) is on the rise in financial services. The report is based on a joint survey from BoE and the Financial Conduct Authority in 2019 of 106 firms.
The UK economy is increasingly powered by big data, with financial services in particular affected by data-driven changes. Machine learning (ML), the branch of artificial intelligence concerned with developing models for prediction and pattern recognition from data without human intervention, has wide ranging applications for financial services.
In recent years increasing volumes of data (including structured, machine-readable data) have accelerated the pace of ML development. The finance sector is taking advantage of this, hoping that ML can assist with large data set analysis and pattern detection. However, while two-thirds of the survey’s respondents are already using ML in some form, applications are, on average, only used in a select few business areas – most commonly, in risk management and compliance, as well as customer facing applications.
Current regulation is not commonly seen as a constraint on ML use, rather, internal issues such as insufficient data and legacy IT systems were identified as a barrier to further ML deployment. As we’ve highlighted here before, increasing use of structured data will help break down the barrier of insufficient data, enabling better development of ML technology.
Risks could be amplified if governance and regulation do not keep pace with technological developments. Questions remain around the use of data, complexity of techniques and automation of processes, systems and traceability or “explainability” of decision-making.
Read the report here.