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Service • Technology • Ago 2020

Many challenges to succeed with post-pandemic banking

Data bias, “black box” risk and lack of human oversight are key concerns

AI will separate winning banks from losers, say 77% of banking executives surveyed during COVID-19; COVID-19 will intensify the use of AI, making effective governance more urgent; The Economist Intelligence Unit report identifies data bias, “black box” risk and lack of human oversight as key concerns; This independent global review consolidates findings from 25 regulatory reports to provide deep insights and guidance on the use of AI in banking.

Data bias, “black box” risk, and lack of human oversight are the main governance issues for banks using AI, according to the Economist Intelligence Unit (EIU) report “Overseeing AI: Governing artificial intelligence in banking”. The report is based on a review of global regulatory guidance on AI risks and governance in banking carried out by the EIU on behalf of Temenos (www.Temenos.com), the banking software company.

The report trends will be discussed on the webinar “Rules of the game changer – governing AI in banking” on 23 July, with CWB Financial Group, TSB Bank and Temenos.

The report highlights that AI is a top priority for technology investment for banks and reveals that 77% of banking executives believe that AI will separate winning from losing banks. AI is expected to retain its importance after the pandemic as banks look to new technologies to help them adapt to changing customer needs and compete with new market entrants. The EIU report reveals that ensuring ethical, fair and well-documented AI-based decisions will be vital for banks deploying AI technology.

The EIU report highlights key governance challenges and distils regulatory guidance for banks using AI, including:

Prema Varadhan, Chief Product Architect and Head of AI, Temenos, commented: "AI is changing the face of the banking industry. It gives banks the ability to process more data in real time, and learn from customer behaviors, helping them to bring operating costs down and hyper-personalize their services. Banks are using AI to transform their customer experiences and back-office operations so ensuring that the technology is deployed ethically is more important than ever. “White box” models, like Temenos’ Explainable AI (XAI), can explain in simple human language how decisions are made and win the trust of regulators and customers alike. As the custodians of customer data and trusted advisors, banks have a responsibility to adopt transparent, explainable AI technology – those that do stand to gain the competitive advantage in the new normal.”

The EIU review cites data bias that leads to discrimination against individuals or groups of people as among the most prominent risks for banks using AI. Commenting in the EIU review, Prag Sharma, Senior Vice President, Citi Innovation Labs, said: “Bias can creep into AI models in any industry, but banks are better positioned than most types of organizations to combat it. Maximizing algorithms’ explainability helps to reduce bias.”

Pete Swabey, Editorial Director EMEA – Thought Leadership, The Economist Intelligence Unit, said: “AI is seen as a key competitive differentiator in the sector. Our new study, drawing on the guidance given by regulators around the world, highlights the key governance challenges banks must address if they are to capitalise on the AI opportunity safely and ethically.” 

About the review

The EIU conducted a structured review of 25 reports, discussion papers and articles, and summarized the main issues raised by regulators on the topic of managing AI risks in banking. These documents were published in the last three years by banking and financial sector supervisory authorities, central banks and supranational institutions, universities and consultancies.

The AI regulatory review follows a global research survey released by the EIU and Temenos, entitled “Forging new frontiers: advanced technologies will revolutionize banking,” released in June 2020. • 8/20


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Service • Ghana • Ago 2020

Building skills for the economy of the future

In Ghana, African Development Bank-funded training builds skills for the economy of the future • The programme of study for skills-focused training was developed in three areas: mechanical engineering, welding and manufacturing, and electronics

A six-year project to develop industrial skills among Ghana’s workforce has improved the engineering and manufacturing skills of young people, promoted economic competitiveness and contributed to an improvement in the quality of life of beneficiaries and a reduction in poverty, according to an African Development Bankreport issued on 15 July 2020.

The Development of Skills for Industry Project (DSIP) was implemented between 2013 and 2019 with $95.2 million in financing from the African Development Fund of the African Development Bank. Its goal was to support the Ghanaian government’s efforts to reform the Technical and Vocational Education Training (TVET) sector and enhance technical and professional schools’ capacity at the intermediate level.

The project achieved significant results. Over the period, 2,010 students enrolled in two technical universities and 10 technical institutes (40.7 percent of whom were women) were aided by scholarships, with the goal of increasing the participation of disadvantaged groups. In addition, 2,500 apprentices, more than half of them women, benefited from this scholarship programme. In total, scholarships were granted to 4,510 people, including 2,173 disadvantaged students,” according to the Project Completion Report prepared by a team led by Efua Amissah-Arthur, social development specialist at the African Development Bank.

“The project improved access to 13 public technical institutions in 38 districts of Ghana’s 10 former regions, through the development of new infrastructure such as laboratories, workshops, classrooms, dormitories, and housing for instructors. 

The project strengthened TVET capacity by training 149 instructors (20 percent of them women) and 800 master craftspeople in 38 districts to support the traditional apprenticeship programme. Twenty masters-level degree-training sessions that focused on a Competency Based Training (CBT) approach to skills training were provided, as were five doctoral programmes for personnel at the College of Technology Education, Kumasi (CoLTEK).  Furnishings, workshop equipment, ICT tools, and training manuals were also provided. 

The report emphasises that production units and entrepreneurial operational models for student use were successfully piloted in each of the 10 technical institutes that developed and strengthened students’ entrepreneurial and professional skills.

The programme of study for skills-focused training was developed in three areas: mechanical engineering, welding and manufacturing, and electronics. The associated training manuals were prepared and printed for distribution. Another area of interest was the hospitality and tourism sector, which received a boost from the project.

“The project was beneficial for students and for the entire country as it aligned with the government’s TVET reform agenda. Women, girls in particular, benefited from increased access to high-quality training, especially skills training, at the diploma, masters and doctoral levels,” the report concludes. • 8/20




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