Insuring trustworthy AI for BFSI
AI adoption in the banking, insurance, and financial industry (BFSI) will be driven not just by technology, but by trusted data, strong governance, and pragmatic execution. Institutions that build solid data foundations and focus on achievable AI use cases are most likely to realize meaningful business value and lead the next wave of digital transformation in BFSI.
Banks and insurers operate in highly regulated environments where being “mostly right” is not acceptable; and current AI solutions are just that. In order for AI projects to move from pilot to production, solutions must be explainable and auditable—often with a human-in-the-loop. In an episode of the Industry Forward podcast, host Kate Eby continues her discussion with Dylan Tancill, Vice President of Sales and Global Head of BFSI at Siemens Digital Industries Software, covering the ways financial institutions are moving from AI experimentation to enterprise-scale implementation while balancing compliance and trust.
Prioritize trust before building
Traditionally, when it comes to making decisions around lending, financial institutions opt to use deterministic models based on machine learning to make business decisions. This is because traditional machine learning models are generally more deterministic than generative AI. In many regulated BFSI use cases, being “mostly right” is not good enough. While LLMs and AI agents can uncover insights more quickly and from broader sets of data, it can also produce incorrect or hallucinated outputs.
To sidestep challenges when building AI solutions, BFSI should treat regulation as a design principle and build from regulation out, rather than treating compliance as an afterthought and considering regulations once the AI project is ready to launch. According to Dylan Tancill, “[Siemens] view[s] our understanding of the regulations in this market very much as a strength.” This is because everything in BFSI, including and especially AI results, must be explainable and auditable while having governance and guardrails. Fines levied by regulators can significantly impact the profitability of a bank or insurer, making the human in the loop an important part of deploying AI in regulated use cases.
Connecting data and decisions
While traditionally associated with engineering industries, the digital thread concept applies to BFSI by linking data to outcomes. Similar to how discrete industries utilize the digital thread as a single source of truth that traces a product’s lifecycle from concept to retirement, banks and insurers can stitch together solutions that were decided on in silos and that don’t necessarily interact well with each other.
Many times, decisions across the business are made in pockets. When deploying AI for speed, additional insights or any other traditional processes such as onboarding, lending, underwriting, fraud and financial crime in general, organizations are touching multiple areas of the business and multiple personas. Using the digital thread, BFSI can create an enterprise trust layer and serve multiple personas.
A digital thread helps by:
- Connecting disconnected data sources
- Preserving context around data
- Improving trust in AI-generated insights
- Supporting regulatory compliance
- Creating end-to-end visibility into how decisions were made
Through linking data, decisions, governance and trust across the enterprise, the digital thread will help AI initiatives succeed as they are applied throughout the organization.
Driving AI adoption through trust
The future winners in banking and insurance will be institutions that build trusted, well-governed data foundations that enable them to use AI responsibly. Enterprise trust layers and strong data governance will be essential enablers of successful AI-driven transformation in BFSI. And all of this is underpinned by keeping the human in the loop and the digital thread, which integrates data, AI, governance and human oversight across the organization.
To learn how your company can become ready for the next big thing in AI, consider tuning in to our Industry Forward podcast. To learn more about Siemens solutions for the Banking, Financial Services and Insurance Industry visit: BFSI industry page.
Siemens Digital Industries Software helps organizations of all sizes digitally transform using software, hardware and services from the Siemens Xcelerator business platform. Siemens’ software and the comprehensive digital twin enable companies to optimize their design, engineering and manufacturing processes to turn today’s ideas into the sustainable products of the future. From chips to entire systems, from product to process, across all industries. Siemens Digital Industries Software – Accelerating transformation.
