2023- The Rise of AI & Blockchain: A Financial Revolution (or another one!)
In 2023, the financial industry experienced a profound transformation, largely driven by the integration of artificial intelligence (AI) and blockchain technology. These innovations are reshaping the way financial systems operate, making them more efficient, transparent, and accessible to a broader audience. AI, once considered a futuristic concept, is now a crucial tool in every economic and financial aspect. It is also used in detecting fraud, and assessing credit risk.
Meanwhile, blockchain, the underlying technology behind cryptocurrencies, is proving its value beyond just digital currencies. Blockchain creates a secure, transparent, and immutable record of transactions, making it a game-changer for industries like finance. This technology is already being used to streamline real-time cross-border payments, asset management, and settlements, reducing costs and improving efficiency by eliminating intermediaries. Its decentralized nature ensures that all participants in a transaction can trust the process without relying on a central authority, creating a more open and equitable system.
However, the more we rely on technology, the more we face fraud and circulation of fake data, two major challenges in financial services today.
It seems that the next phase must be to use AI and blockchain together to combat these challenges. Fraudulent activity has become increasingly sophisticated, with cybercriminals finding new ways to manipulate data and transactions, so blockchain’s immutability, for example, provides an essential solution. Once data is entered into a blockchain, it cannot be altered or erased, ensuring the integrity of financial transactions. This transparency makes fraudulent activities more easily detectable, as any unauthorized changes to transaction records would be immediately visible to all parties in the network. In addition, AI can complement this by analyzing transaction data in real-time, identifying patterns that may signal fraudulent behavior. AI can detect anomalies like unusually large transactions or mismatched data, alerting financial institutions to potential fraud before significant damage occurs.
Also, each of these new “technology accessories” should be used to cross protect the other.
AI systems rely heavily on training data to make decisions and predictions. If this data is tampered with or manipulated, the AI can produce biased or inaccurate results. Blockchain can ensure the integrity of training datasets. By recording every piece of data used to train AI on a blockchain, organizations can ensure that the data is immutable and transparent.
AI can be used to monitor blockchain transactions in real-time, identifying suspicious or abnormal behavior that may indicate malicious activity, such as money laundering or unauthorized access. By analyzing patterns and detecting outliers in transaction data, AI can flag suspicious activities on the blockchain, allowing administrators or users to take corrective actions before significant damage is done.
In fact, AI-powered tools are already being used to monitor blockchain activity in real time, particularly to detect fraudulent transactions, money laundering, and other illicit activities.
My conclusion is that any new technology innovation should always have 2 purposes: its core innovation and its unique contribution to protect us from technology misuse.