Why machine learning in banking sector?

1. Improved decision making

One of the benefits of machine learning in banking is improved decision making. As
compared to traditional methods, artificial intelligence helps banks to calculate credit
scores accurately. The main reason ML can do this is that it can provide an objective
evaluation without any bias. The huge amount of data collected from the potential
borrower assists banks in making better decisions.
2. Better risk management
AI and ML reduce risks for both customers and banks through accurate reporting.
Artificial intelligence can also make predictions based on transaction history after
giving credit to customers. Employees have more insights into credit risk testing. Early
detection of errors and the availability of potential future risks helps the banking
industry to prepare in advance.
3. Prevention of fraud
Credit card fraud is a huge problem in the banking industry. Machine learning for
banking can significantly lower the number of fraudulent activities. The majority of
fraud occurs when customers pay for products, whether online or offline. Machine
learning in banking prevents this from happening in several ways. For example, facial
recognition can be used to confirm the person using a credit card is the owner.
4. Improved customer experience
With technology changing almost every aspect of life, consumers are looking for better
services and eager to get the same from banking institutions. At the same time, banks
that can provide more security and a personalized experience would attract more
clients. Customers want digital banking products that are easy to use. One way in
which ML improves the overall experience and services is by reducing the time it takes
to make credit decisions and banking operations. Loan application, which used to take
weeks, can now be made within days. Machine learning can make an unbiased
analysis based on several credit factors.
5. Internal operational solutions
Machine learning in the banking sector has greatly changed internal operations for the
better. Automation reduces the time staff spends on redundant tasks. Therefore,
resources can be allocated towards improving the overall experience. Robots perform
routine tasks with minimal risk of errors. So a bank can provide efficient solutions while
automation gives employees the chance to pay more attention to the most important
tasks.

Using ML has so many advantages, with the most important one being internal
operational solutions today. Robots can go through a customer database at record
time, thus reducing the need for employees to do this manually.
6. Marketing and lending solutions
ML and AI in fintech collect data and also search for specific patterns that help banks
make better marketing predictions. Examples of predictions that ML can make include:
• Changes in currencies,
• The best investment ideas,
• Credit risks,
• The optimum loan agreement for a client.
This data assists a bank in deciding where to invest, thus increasing their revenue. It
also provides more accurate information on how to attract new clients.
Types of cyber-attacks in banks
• Malware
The malware-as-a-service model has made it very easy for malicious criminals to
access top malware technology. Notably, malware was responsible for 75% of all
data breaches in this sector in 2019. New threats such as file-less malware attacks
have also surfaced, making it clear that banking institutions require top-notch
cybersecurity programs.
• Social engineering
Unlike conventional attacks that exploit system vulnerabilities, social engineering
attacks capitalize on human weaknesses. By building elaborate phishing scams to
trick top officials, hackers gain access to login credentials. Hackers can use these
credentials to steal critical data or even encrypt data to lock users out of their
systems.
• Data manipulation
Many insidious cybercriminals manipulate data instead of stealing it outright. They
make changes in the transactional data stored in the system. Since the changes
appear legit, they’re almost impossible to identify. Even small, undetected changes
can snowball into massive issues down the line. Data manipulation can also lead to
non-compliance with data standards, resulting in substantial regulatory fines.
• Third-party services
Most banks rely on third-party service providers to fulfill their digital banking needs.
Even if the bank itself has unimpeachable security systems in place, vulnerabilities in
third-party systems can cascade down and affect the bank. So, banks need to
ensure all their service providers are compliant with the latest industry standards in
security protocols.
• Spoofing
Spoofing has become a leading cause of worry for financial institutions. In this
method of attack, cybercriminals create fake websites that look very similar to the
bank’s original website. Users are redirected to the fake website, where they’re
asked to enter their login credentials. Since the website looks the same as the
bank’s, most users do not suspect foul play. Once the users fill in their credentials,
they are redirected to the original bank’s website. Hackers can cause massive
monetary and reputational damage after stealing user credentials in this manner.
• Unencrypted data
Not encrypting data is particularly responsible for attacks on smaller regional and
cooperative banks with fewer funds to invest in cybersecurity. Storing unencrypted
data can make it much easier for hackers to exploit it. Encrypting all the stored data
ensures that hackers will not be able to use the stolen information even after gaining
access.
Top 10 applications of machine learning in healthcare –
1. Identifying Diseases and Diagnosis
One of the chief ML applications in healthcare is the identification and diagnosis
of diseases and ailments which are otherwise considered hard-to-diagnose. This
can include anything from cancers which are tough to catch during the initial
stages, to other genetic diseases. IBM Watson Genomics is a prime example of
how integrating cognitive computing with genome-based tumor sequencing can
help in making a fast diagnosis.
2. Drug Discovery and Manufacturing
One of the primary clinical applications of machine learning lies in early -stage
drug discovery process. This also includes R&D technologies such as next -
generation sequencing and precision medicine which can help in finding
alternative paths for therapy of multifactorial diseases. Currently, the machine
learning techniques involve unsupervised learning which can identify patterns in
data without providing any predictions.
3. Medical Imaging Diagnosis
Machine learning and deep learning are both responsible for the breakthrough
technology called Computer Vision. This has found acceptance in the InnerEye
initiative developed by Microsoft which works on image diagnostic tools for image
analysis. As machine learning becomes more accessible and as they grow in
their explanatory capacity, expect to see more data sources from varied medical
imagery become a part of this AI-driven diagnostic process.
4. Personalized Medicine
Personalized treatments can not only be more effective by pairing individual health
with predictive analytics but is also ripe are for further research and better disease
assessment. Currently, physicians are limited to choosing from a specific set of
diagnoses or estimate the risk to the patient based on his symptomatic history and
available genetic information.
5. Machine Learning-based Behavioral Modification
Behavioral modification is an important part of preventive medicine, and ever since
the proliferation of machine learning in healthcare, countless startups are cropping
up in the fields of cancer prevention and identification, patient treatment, etc.
6. Smart Health Records
Maintaining up-to-date health records is an exhaustive process, and while technology
has played its part in easing the data entry process, the truth is that even now, a
majority of the processes take a lot of time to complete. The main role of machine
learning in healthcare is to ease processes to save time, effort, and money. Document
classification methods using vector machines and ML-based OCR recognition
techniques are slowly gathering steam, such as Google's Cloud Vision API and
MATLAB's machine learning-based handwriting recognition technology.
7. Clinical Trial and Research
Machine learning has several potential applications in the field of clinical trials and
research. As anybody in the pharma industry would tell you, clinical trials cost a lot of
time and money and can take years to complete in many cases. Applying ML-based
predictive analytics to identify potential clinical trial candidates can help researchers
draw a pool from a wide variety of data points, such as previous doctor visits, social
media, etc.
8. Crowdsourced Data Collection
Crowdsourcing is all the rage in the medical field nowadays, allowing researchers and
practitioners to access a vast amount of information uploaded by people based on
their own consent. This live health data has great ramifications in the way medicine
will be perceived down the line.
9. Better Radiotherapy
One of the most sought-after applications of machine learning in healthcare is in the
field of Radiology. Medical image analysis has many discrete variables which can arise
at any particular moment of time. There are many lesions, cancer foci, etc. which
cannot be simply modeled using complex equations. Since ML-based algorithms learn
from the multitude of different samples available on-hand, it becomes easier to
diagnose and find the variables.
10. Outbreak Prediction
AI-based technologies and machine learning are today also being put to use in
monitoring and predicting epidemics around the world. Today, scientists have access
to a large amount of data collected from satellites, real-time social media updates,
website information, etc. Predicting these outbreaks is especially helpful in third-world
countries as they lack in crucial medical infrastructure and educational systems. A
primary example of this is the ProMED-mail, an Internet-based reporting platform
which monitors evolving diseases and emerging ones and provides outbreak reports
in real-time.
Different between Deep learning v/s restricted Boltzmann machines
Deep learning is a machine learning technique that teaches computers to do what
comes naturally to humans: learn by example. Deep learning is a key technology
behind driverless cars, enabling them to recognize a stop sign, or to distinguish a
pedestrian from a lamppost. It is the key to voice control in consumer devices like
phones, tablets, TVs, and hands-free speakers. Deep learning is getting lots of
attention lately and for good reason. It’s achieving results that were not possible
before.
In deep learning, a computer model learns to perform classification tasks directly from
images, text, or sound. Deep learning models can achieve state-of-the-art accuracy,
sometimes exceeding human-level performance. Models are trained by using a large
set of labeled data and neural network architectures that contain many layers.

Restricted Boltzmann Machine is an undirected graphical model that plays a major

role in Deep Learning Framework in recent times. It was initially introduced as
Harmonium by Paul Smolensky in 1986 and it gained big popularity in recent years in
the context of the Netflix Prize where Restricted Boltzmann Machines achieved state
of the art performance in collaborative filtering and have beaten most of the
competition.
It is an algorithm which is useful for dimensionality reduction, classification, regression,
collaborative filtering, feature learning, and topic modeling.
how to prevent banking sector from cyber attack
It is essential to implement internal corporate policies that help prevent any fraud or
cyber crime.
• Customer data must be regularly secured and backed up.
• Every employee should have a separate user account and with a policy that
stipulates the changing of passwords every three months.
• Administrators must prohibit employees from downloading and installing
unauthorized software.
• Bank policies must also set appropriate approval protocols. Any transaction that
involves a wire transfer or an Automated Clearing House transfer must involve
two approvers.

Educate Employees

• All employees must be made aware of the dangers of opening or downloading

email attachments from unknown sources. Employee awareness is particularly
important because there have been many cases where a bank’s computer was
infected by a malicious program after an employee clicked an attachment from
an unknown source.