Chapters authored
Artificial Intelligence and Bank Soundness: A Done Deal? - Part 1
Banks soundness plays a crucial role in determining economic prosperity. As such, banks are under intense scrutiny to make wise decisions that enhances bank stability. Artificial Intelligence (AI) plays a significant role in changing the way banks operate and service their customers. Banks are becoming more modern and relevant in people’s life as a result. The most significant contribution of AI is it provides a lifeline for bank’s survival. The chapter provides a taxonomy of bank soundness in the face of AI through the lens of CAMELS where C (Capital), A(Asset), M(Management), E(Earnings), L(Liquidity), S(Sensitivity). The taxonomy partitions opportunities from the main strand of CAMELS into distinct categories of 1 (C), 6(A), 17(M), 16 (E), 3(L), 6(S). It is highly evident that banks will soon extinct if they do not embed AI into their operations. As such, AI is a done deal for banks. Yet will AI contribute to bank soundness remains to be seen.
Part of the book: Operations Management
Artificial Intelligence and Bank Soundness: Between the Devil and the Deep Blue Sea - Part 2
Banks have experienced chronic weaknesses as well as frequent crisis over the years. As bank failures are costly and affect global economies, banks are constantly under intense scrutiny by regulators. This makes banks the most highly regulated industry in the world today. As banks grow into the 21st century framework, banks are in need to embrace Artificial Intelligence (AI) to not only to provide personalized world class service to its large database of customers but most importantly to survive. The chapter provides a taxonomy of bank soundness in the face of AI through the lens of CAMELS where C (Capital), A(Asset), M(Management), E(Earnings), L(Liquidity), S(Sensitivity). The taxonomy partitions challenges from the main strand of CAMELS into distinct categories of AI into 1(C), 4(A), 17(M), 8 (E), 1(L), 2(S) categories that banks and regulatory teams need to consider in evaluating AI use in banks. Although AI offers numerous opportunities to enable banks to operate more efficiently and effectively, at the same time banks also need to give assurance that AI ‘do no harm’ to stakeholders. Posing many unresolved questions, it seems that banks are trapped between the devil and the deep blue sea for now.
Part of the book: Operations Management