Major UK bank Barclays is broadening the ways it uses AI after becoming a “flagship customer” of AI company Simudyne Technology, according to the Financial Times . Simudyne is focused on using AI to create models of various situations a bank could be put in, including models that account for human mistakes and run simulations, as a means of lowering risk and reducing error.
The bank is looking to leverage the technology in its trading, lending, and risk management divisions. For context, Barclays has been working with Simudyne since May 2017, when the two signed a collaboration deal after Simudyne participated in Barclays’ fintech accelerator program.
This push demonstrates how banks can use AI to protect themselves from new types of risk.Though AI-based modeling isn’t new for banks, Simudyne’s technology is particularly sophisticated, with a focus on “individual factors” and “agent-based modeling” that can take rationality, policy change, and environmental differences into account, according to the FT.
That’s allowing Barclays to continue to expand its modeling efforts, from just lending to “the entire financial marketplace,” and build robust and sophisticated simulations that can help it better prepare for anything that might come down the line — the FT noted that Simudyne is especially useful for anticipating events like “trade wars or other policy changes.” That could be particularly salient in a rapidly shifting geopolitical environment, and at a time when banks are at an elevated risk for fraud and cyberattacks, according to a new Bank of England (BofE) study.
If successful, the move could pave the way for new AI use cases and demonstrate the benefits of leveraging the emerging technology. Banks have been increasing their use of AI, on both the front end as well as the back end, as a way of improving efficiency, cutting costs, and limiting fraud risk.
But Barclays’ use of more advanced technology could be emblematic of what’s to come, and might serve as a blueprint for how banks can use AI to not only automate existing processes or preempt problems, but also to run through and model full scenarios to prepare for any scenario that might occur. If effective, it could also put Barclays towards the forefront of the space, positioning it ahead of competitors and ensuring success across its divisions regardless of the global environment.