"The Future is Now": How AI is Changing Cybersecurity Risk in Banks & Financial Services

By Sheku Jusu-Sheriff

Sales and Marketing Manager, Africa Risk Management and Compliance Partners

Artificial Intelligence (AI) is a technology that allows computers and machines to mimic human capabilities such as learning, understanding, problem-solving, decision-making, creativity, and autonomy (IBM, 2024). Since its inception, banks and financial institutions have leveraged AI to address challenges, conduct research, and strengthen their security. However, while AI has become a valuable tool for these institutions, it has also made it easier for cybercriminals to exploit online systems through AI-driven cyberattacks. These attacks use AI technology to increase the efficiency, complexity, and scale of malicious activities. In this article, I will explore the advantages and disadvantages of AI, as well as the impact of AI-driven cyberattacks on banks and financial institutions.

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The use of Artificial Intelligence (AI) offers several advantages for banks and financial institutions. First, AI significantly reduces human error. While AI mimics human abilities, it operates with greater accuracy, as precise models program it. This allows banks and financial institutions to rely on AI for tasks where there might be uncertainty, minimising the risk of mistakes that human error could introduce. Another benefit of AI is its constant availability. Unlike humans, AI systems can operate 24/7, allowing institutions to quickly access information or solve problems at any time simply by entering a query. AI is also highly efficient at identifying and analysing data patterns. This is particularly useful when applied to Anti-Money Laundering (AML) Transaction Monitoring; Fraud Prevention Systems, social media engagement and financial performance measurement.

The increased operational efficiencies that AI offers will positively impact banks by reducing costs therefore improving key performance metrics such as Cost: Income ratio.

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The disadvantages of AI are many and varied. There can be an overreliance on AI, which could result in a lack of human involvement in the delivery of services to customers. After all, banks are here to serve us humans, and the benefits of interaction between bank staff and customers should not be underestimated. AI cannot replace our desire for social relationships, be it in the bank branch or anywhere else.

Additionally, AI lacks creativity. While AI excels at solving problems based on provided data, it cannot generate original ideas or solutions outside of its programmed input. Humans, on the other hand, can think creatively and "outside the box," which is why banks and financial institutions still value human talent for creative tasks despite advances in AI.

Another significant concern with AI is data privacy and security. AI systems collect vast amounts of data, including personal information, to function effectively. This poses a risk, as cybercriminals may exploit these systems through AI-driven cyberattacks. Techniques such as social engineering, where AI algorithms analyse data to craft targeted attacks, or password cracking using brute force AI algorithms, put sensitive information at risk.

This highlights the significant impact AI-driven cyberattacks have had on banks and financial institutions. Since AI’s introduction, cybercriminals have increasingly leveraged these technologies to infiltrate systems and steal sensitive data with greater ease and precision. AI enables attackers to scale up their operations and execute more targeted attacks. For example, deepfakes use AI to generate highly convincing audio or video impersonations, while automated phishing campaigns utilise AI to analyse language patterns and personal details to craft highly persuasive messages. As a result, banks and financial institutions have been compelled to significantly increase their investment in cybersecurity. The sophistication of AI-driven attacks, which often come in the form of seemingly legitimate emails, makes them difficult to detect, heightening the risk of personal data being exposed. This underscores the need for robust cybersecurity measures to prevent sensitive information from being compromised. Failing to do so could lead to substantial financial losses, as data breaches are expected to cost organisations an average of $4.88 million in 2024 (IBM, 2024). Without adequate investment in cybersecurity, banks and financial institutions not only face the risk of costly breaches but will also have to spend even more to implement stronger protection measures, as seen with UK financial institutions facing average breach costs of ￡5.3 million (Textaport).

Over-reliance on AI can lead to reduced employment opportunities and diminished human involvement in key tasks. Additionally, AI lacks the creative problem-solving abilities that humans possess. Furthermore, AI systems collect vast amounts of personal data, making them attractive targets for cybercriminals who exploit these systems through AI-driven cyberattacks. These attacks have had a major impact on banks and financial institutions, prompting significant investment in cybersecurity measures due to how easily attackers can breach sensitive data through AI-enhanced methods.

At ARMC, our Cybersecurity team offers in-depth risk assessments designed to identify vulnerabilities, close control gaps, and implement tailored solutions to protect your organisation. We also evaluate the effectiveness of AI-driven cybersecurity measures to ensure your systems are resilient against evolving threats.

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