Why are banks falling? Because, right now, the banks have an instant urge to dispose of the excess of liquidity that they have after the pandemic reckless money printing. Nonetheless, they have an underlying fear at the same time because, as per the World Bank’s report, there has been a rise in the funding needs of SMEs, which has touched a whopping $5.2 trillion. However, one shouldn’t forget that miscalculated risk assessments have already wreaked havoc in the form of Credit Suisse, Signature Bank and many more. Keeping that in mind, it has become necessary to perform optimum risk management before indulging in any adventurous credit /loaning pursuits to avert any other 2008 financial meltdown. In this pursuit, AI-powered open banking will script a new way forward.

What is Open Banking?

Open Banking is a new way of sharing important customer data with third parties that significantly helps evaluate the risks and make informed financial decisions. In the process, assisting in risk mitigation and improving the financial dynamics.However, banks are averse to integrating open banking, citing multiple regulatory reasons which undoubtedly expose them to the point of failure with respect to risk assessment and providing recoverable loans.

How AI powered by Blockchains Help Undertake Open Banking For the Next Financial Revolution?

Bypassing Regulation For Building Business Capability

While analyzing the bulge-bracket banks like Silver Valley Bank, Silvergate and Signature Bank, and Credit Suisse, it has been unveiled that these banks had one key problem of management. For example, as far as Credit Suisse is concerned, key information from the board didn’t come out at the right time, which could have averted the fallout. To put that into perspective, many companies like Ohio Mattress Co. and Green Capitals had defaulted time and again, yet they were given loans because of mismanagement.

Why?

One of the reasons was heavy centralized control and the inability of the banking infra to identify the risk assessment based on their business plans. Juxtaposing the same with an advanced AI infra built alongside blockchains. With the help of AI, it would have been easier to analyze the behavior patterns of the loaners based on their loan seeking proposals and business dynamics. Furthermore, the use of blockchains could have mitigated the risks of information sharing to initiate predictive intelligence through the use of such data. Hence, when blockchains are fused with AI, it could simplify how we broadcast, process, evaluate and manage the data to gain collective insights for informed business decisions. In the process, lending is not just based on emotions and sentiments but on fortifying data-backed intelligence. The presence of advanced technology and the quick ability to adopt the same through quick deployment could supercharge the financial space to embrace the next level of innovation.

Building a Fortifying Governance Mechanism

Setting up a cloud platform that can streamline quicker information sharing undoubtedly creates a reliable nexus; nonetheless, it also exposes it to the point of failure from a security standpoint. What the banking/financial system requires is to keep regulatory practices, risk assessments and cloud-natives on a level playing field for all. All of these could be triggered when we have blockchains at the backdrop for data protection.While from the front, AI is leading the charge by introducing the best-of-breed data lake or data mesh platforms such as data wrangling pipelines and MLOps, along with Spark-curated data vaults by business domains, streaming-enabled data fabrics and AI-augmented transfer learning leveraging edge computing for financial crime prevention biometrics. These set-ups shall evoke security optimization, data privacy, data analysis and risk assessment to simplify loan lending and allow financial institutions to make informed decisions while lending to SMEs and other institutions.

Conclusion

The banking and financial system has already faced a rough phase ever since the 2008 financial crisis due to mismanagement and the inability to track and trace financial implosions. However, with the emergence of technology like blockchains and AI, financial institutions have now gotten the flexibility and power to upgrade to a new dynamic. One should just be mindful of the fact that when it comes to reinventing a new paradigm, one doesn’t have to be concerned with reinventing the wheel but moving in the direction of the wind. Right now, AI bundled with blockchains has paved the way for banking and finance to readjust to ensure sustainability and advancements for a better future ahead.In this transformative journey, VE3 emerges as a beacon of support and innovation. Through our comprehensive offerings, we are uniquely positioned to empower financial institutions to embrace this paradigm shift. Our expertise in implementing blockchain solutions ensures the secure and transparent recording of financial transactions, enhancing trust and reducing the risk of mismanagement. Moreover, our AI-driven tools enable financial institutions to harness the power of data analytics, making informed decisions and optimizing operations. With our support, the banking and financial industry can seamlessly transition into this new era of technology-driven finance. By leveraging our solutions, you can streamline processes, reduce inefficiencies, and enhance their ability to adapt to dynamic market conditions.