During his address at the Risk Management Roundtable hosted by FITC, he highlighted the limitations of conventional fraud detection techniques that depend on manual checks and human judgment.
Mr. Hassan characterized AI technologies such as Machine Learning (ML), Natural Language Processing (NLP), and Anomaly Detection as transformative tools that can significantly enhance the effectiveness and precision of fraud prevention strategies.
He further analyzed how the implementation of AI could strengthen fraud detection capabilities for Nigerian banks and other financial entities.
“AI can process vast amounts of data in real-time, identify unusual patterns, and detect emerging threats long before they cause significant harm,” Mr. Hassan stated.
He described how artificial intelligence can identify unusual transactions, such as significant withdrawals from unfamiliar locations, and can either suspend accounts or notify relevant parties. By examining large datasets and evaluating various factors, AI can minimize false positives, enabling financial institutions to concentrate on real threats. Additionally, AI's capability to monitor international transactions and assess user behavior, including typing habits and device usage, offers a strong defense against identity theft and account breaches.
Hassan also discussed the regulatory implications of AI implementation, emphasizing the necessity of establishing standards for its ethical and transparent application.
"Financial regulators and supervisors must foster public confidence by ensuring that AI technologies enhance stability while respecting data privacy and consumer rights," he remarked.
He praised the Federal Ministry of Communications, Innovation, and Digital Economy for formulating Nigeria’s inaugural National Artificial Intelligence Strategy (NAIS), which seeks to harness AI’s transformative potential in a sustainable and ethical manner. On a global scale, organizations such as the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (BCBS) are also developing guidelines for the integration of AI in financial services.
Hassan pointed out that AI could improve regulators' capabilities to identify suspicious transactions and predict emerging threats through predictive analytics. By recognizing vulnerabilities before they can be exploited, regulators can take proactive measures to protect the financial system. Furthermore, AI can optimize regulatory processes, facilitating effective resource distribution and prioritizing transactions that pose a higher risk.
The Managing Director of the NDIC recognized the significant potential of AI but also highlighted the associated challenges. Major concerns include adherence to data protection laws, particularly the Nigeria Data Protection Regulation (NDPR), and safeguarding AI systems from cyber threats.
Hassan further emphasized the necessity of addressing bias in AI models to uphold fairness and maintain public confidence.
“Ensuring transparency in AI decision-making is crucial,” he remarked. “Regulatory bodies need to create frameworks that oversee AI systems, ensuring they function ethically and comply with legal requirements.”
He called on stakeholders to adopt AI while focusing on the establishment of strong regulatory frameworks. Other participants at the meeting underscored the importance of collaboration within the financial sector to address fraud challenges in conjunction with technological advancements.