AI challenges BFSI data infrastructure security & quality

The rapid progress of artificial intelligence (AI) is creating significant demands on existing data infrastructures in the Banking, Financial Services and Insurance (BFSI) sector, according to a report by Hitachi Vantara.

The State of Data Infrastructure 2024 report, based on the responses of 231 global IT and business leaders, highlights a critical challenge where businesses must choose between prioritising security, ensuring data quality, and maintaining sustainability. While 36% of respondents acknowledge the crucial role of data quality in AI success, the prevailing focus on data security leaves performance gaps in AI applications and influences long-term return on investment.

The survey revealed that data security stands as the main concern for nearly half of the respondents, emphasising the need to safeguard against both internal and external threats. The report shows that 84% of participants believe that losing data due to either attack or mishap would be catastrophic, thereby justifying the heightened focus on security.

In the BFSI sector, the report indicated that data availability aligns with needs only 25% of the time, with AI models demonstrating a 21% accuracy rate. Internally, 36% expressed concern about data breaches triggered by AI errors, and 32% were worried about AI-enabled attacks leading to such breaches.

Mark Katz, Chief Technology Officer of Financial Services at Hitachi Vantara, remarked, "The business model in financial services is inherently tied to trust. Reputational harm is a significant risk, and so in our industry, the interaction between security and accuracy is a critical and complex challenge." He further illustrated the risks posed by AI errors, such as chatbots disclosing sensitive data, warning that these scenarios could have severe repercussions.

The report also noted that AI integration in BFSI continues to expand, though sometimes without comprehensive preparation. A majority, 71%, admitted to implementing and refining AI in live environments rather than in controlled sandbox environments, which only 4% of respondents used.

Alenka Grealish, Co-Head of Generative AI Intelligence at Celent, commented, "While the rapid adoption of generative AI in the financial services sector is exciting, financial institutions need to ensure they are taking a strategic approach. Organisations must balance speed and innovation with a clear focus on security, accuracy and ethical responsibility." Grealish added that organisations that meticulously plan and employ robust frameworks can mitigate risks and unlock the potential of AI, thereby fostering sustainable growth and competitive benefits.

The report underscores the importance of creating AI-ready infrastructures by urging BFSI entities to engage in responsible experimentation, establish sustainability practices, and simplify system management. It suggests using AI defensively by employing redundancy systems and encouraging the use of AI for detecting risks, enhancing recovery, and securing data through immutable, encrypted storage solutions.

The findings from Hitachi Vantara's research, drawing from BFSI specialists, C-level executives, and IT decision-makers across 15 countries, provide critical insights into the current state of AI and data infrastructure challenges faced by the BFSI sector globally.