South Korean banks are employing artificial intelligence to toughen customer protection amid scandalous losses from mis-selling.
According to industry sources on Monday, Shinhan Bank will launch a task force team with its R&D this month to build a system to prevent mis-selling of investment products inside.
“The AI-backed system is to monitor the entire sale process to check whether bankers have a deep understanding of each investor’s investment type and fully explain the danger of losses from products recommended to them,” said a bank official. “The system will give a warning to bankers if there’s any wrongdoing.”
In Korea, financial institutions must tape-record the entire process of selling high-risk financial products like equity-linked securities (ELS) and derivatives-linked assets for investor protection. Skipping to process in selling product to aged investor over 70 or a risk-averse investor, the seller can be fined 500 billion won ($42,258.28) for violating the capital market law.
The latest decision came out to bolster own efforts for efficient customer protection as the law itself hardly prevent their losses in advance, a source said.
As part of that, Shinhan Bank employed the text-to-speech system to read out all the terms and conditions of products to investors at the end of last year. Additional explanation needed is offered by bankers, and the company expects synergy with new AI-backed system.
KEB Hana Bank also started testing out handwriting recognition system using AI the check the investor’s understanding of product terms and conditions, before official launch in the first half of this year.
Woori Bank developed own machine reading comprehension technology for banking last year to examine the terms and conditions are legitimate.
Financial authorities last year announced it is prepping stricter regulations such as 100 million won in fine, six-month business shutdown and executive reshuffle on unlawful mis-selling actions.
By Chung Joo-won and Lee Ha-yeon
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