Decoding AI in Financial Services – Business Implications for Boards and Professionals
A quick search for ‘books for Boards on AI’ reveals a small library that contain problem-solving methods, representation and models, game playing, automated understanding of natural languages, heuristic search theory, robot systems, heuristic scene analysis and specific artificial-intelligence and much more.
However, the first book to address the needs of the Board in the financial services sector is this one by Clara Durodié, an internationally recognised specialist in ethical artificial intelligence for business growth and profitability in financial services.
I met Clara just before writing this book review – not something we often get the opportunity to do on the Journal of Data Protection and Privacy.
Clara is a graduate of Oxford University, an entrepreneur and one of the very few AI practitioners who possess the art of speaking in simple language and making sense of a topic that could put a chill wind down the spines of many Board directors. This has led her to advise the World Economic Forum’s 4th Industrial Revolution Centre in San Francisco as well as being a member of the European Union Artificial Intelligence Alliance.
If you fear that AI is a subject you need to get to grips with, then you have nothing to fear! This book is a gentle entry point and an antidote to the hype surrounding the topic of AI.
Having had the benefit to have seen an earlier manuscript of the book at an early point in its gestation, I can confirm the book does demystify jargon while comprehensively covering the topic from both a technical level to strategic issues.
And don’t take my word for it. John Meinhold, a leading independent advisor to financial institutions and Boards based in Malaysia, adds: “Clara balances the practical application of AI with a good understanding of the ethics involved, bringing into stark reality what can happen if we go AI mad without considering the consequences.”
Clara was at pains to point out to me when we met that all financial services companies need to be AI literate or will struggle to remain profitable and competitive. AI is making such a seismic change to business models in the sector that Boards cannot afford to ignore the impact AI will have on corporate governance in the future.
“Board directors have many fiduciary duties…they also have the duty of oversight which requires that they put systems in place for effective reporting and monitoring to allow them to identify potential risks to the organisation. The duty of oversight needs to include their ability to nudge the CEOs to move the organisation forward at a fast-enough pace to keep it ahead of the competition.”
According to research published by the MIT Sloan Management report in 2019, having a digitally literate Board is good business and the new financial performance differentiator that can result in 38 percent higher revenue growth, 34 percent higher ROA and 34 percent higher market cap growth.
This is supported by recent research presented to the FinTech Think Tank of the European Risk Management Council that discussed how operationalisation of AI continues to accelerate in the sector. At the roundtable discussion, hosted by Chartis Research, the message was clear that vendors who are unable to demonstrate efficiency and cost savings through AI will have an increasingly difficult time.
The book is broken down into ten chapters:
Chapter 1: What is intelligence?
Chapter 2: The Taxonomy of Artificial Intelligence
Chapter 3: Prerequisites for Artificial Intelligence
Chapter 4: The Current State of AI – Evolution, Growth and Investing
Chapter 5: Corporate Governance and AI adoption
Chapter 6: Boardroom oversight and AI adoption
Chapter 7: Strategic Adoption of AI in Business
Chapter 8: How AI is reshaping Financial Services
Chapter 9: AI Applications
Chapter 10: About the Future
Each chapter helpfully contains a summary of the key points to remember as well as questions for Boards to ask that are both strategic and practical around the deployment of AI in the business.
Profits from the sale of each book will be donated to a bursary set up in memory of Roy Stuart, former Dean of Hertford College Oxford that will support students in financial distress as well as paying for tree planting by the Woodland Trust, a charity supported by Sir David Attenborough.
Ardi Kolah LL.M, CIPP/E, CIPM, FIP
Founding Editor-in-Chief, Journal of Data Protection & Privacy
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