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Data> Big Data 22 Oct 2019

Ethics, governance, and regulation will be essential in using big data and artificial intelligence

Artificial intelligence and big data, are proven contributors of innovation to the financial system. The digital explosion and technological advances have caused a revolution in society and in the corporate organization. As explained by Jorge Sicilia, Chief Economist of BBVA Group and director of BBVA Research, the financial sector is no stranger to these changes and the next wave of innovation is going to be based on artificial intelligence.


Jorge Sicilia participated in a meeting organized by the Global Interdependence Center at the Rafael del Pino Foundation. His presentation covered “Financial technology in banking / artificial Intelligence”’ focusing on the opportunities and challenges associated with the use of data in the banking sector.

Even if banking functions themselves haven’t changed, they now entail an extensive and dynamic use of data, the primary raw material of today’s technological transformation. Data is causing the sector to change in response to new massive personalization opportunities and the fact that multiple suppliers can create individual markets for each user. The functions don't change, it’s the people involved who change and how they carry out these services.

Big data and artificial intelligence are key across the value chain. As a starting point, they provide a better understanding of the banking environment by analyzing both the social context and the economic reality, but they can also be used to gain a better understanding of customer needs.

Significant advances in the fields of artificial intelligence and big data have yielded new high-frequency indicators to help understand the economic landscape. "They can complement the data already published by official statistical bodies, facilitating economic cycle predictions and providing a greater level of granularity, which isn't yet available from the official data," Sicilia explained in reference to BBVA Research studies. There is an avenue to be explored between private enterprise and public institutions in order to produce quality data, fit for public use, and for the benefit of society.

Similarly, artificial intelligence and big data have served to align strategy and commercial offers with the prevailing economic conditions, which can now be assessed in real time thanks to numerous new players who are driving competition and providing innovative services to customers. Furthermore, despite mistrust of digitalization and datification, both elements are truly useful when it comes to better fulfilling obligations on behalf of the customer: from fraud detection to complying with regulatory and supervisory authority requirements. 

Finally, both artificial intelligence and big data have enriched and personalized the financial sector's portfolio of products and services for its customers. Incorporating the use of customer data makes it possible to offer customers more personalized information, which in turn lets them make better decisions. BBVA has developed various tools that demonstrate this value-add: Bconomy, which gives customers insight into their financial health and comes with tailored improvement plans, and the banking aggregator, One View.

Jorge Sicilia BBVA Research

Poner foto de Jorge Sicilia, economista jefe del Grupo BBVA y director de BBVA Research.

The challenge: earning customer trust

Nevertheless, artificial intelligence and big data also represent a challenge for the financial industry, because in a customer-centric service it is increasingly important to earn consumer trust. 

On one hand, companies must be governed by ethical principles “that ensure customer autonomy, non-maleficence, beneficence, and justice,” Sicilia asserted. On the other hand, the role of a company’s internal governance is crucial, because  "processes and technology that ensure anonymous and secure data must be adopted" he added. Governance of every aspect — data collection, aggregation, and the combination of the two to avoid biases, and its use — is essential in this “ethical realm.”

The role of regulation is equally important. "Regulatory authorities must prescribe rules that ensure accountability, non-discrimination, privacy and consumer rights," said Sicilia. In addition, consumer rights must be completely protected in the system, meaning at both a horizontal level as well for each specific sector. Customer trust will depend on how companies manage these ethical principles, data governance and related processes, and the fulfillment of regulatory requirements.

New challenges to competition and the stability of the sector

Big data has led to a revolution in the banking sector. Alongside traditional banks, a new set of players has burst onto the scene: the fintechs and the Big Techs. Furthermore, new business models have emerged such as open banking, and the competitive landscape has been turned on its head. China is the emerging economic superstar, joining the traditional heavy-hitters with unusual force, a wider reach in an ever-growing market, and new value chains in a user-centric offering.

In this context, when it comes to assessing the competitive landscape, regulation will be key. If equal conditions are not guaranteed, “access to data is going to be the primary barrier to entry, given that the Big Techs (Google, Amazon, Facebook, and Apple) are insurmountable in this respect,” Sicilia pointed out. This fact necessitates regulatory involvement at different layers of the sector, legislative harmonization (so all players are treated equally), and international cooperation that encourages consumer-benefiting competition.

In short, Sicilia asserted that “with our approach to artificial intelligence and big data we can make great progress in different areas.” He went on to add, "Each new player adds a new dynamic to the system, which in certain respects is extremely positive since financial institutions can take advantage of the opportunities created by technology.” What is imperative is that the approach is always "for the benefit of the user.”

Finally, Sicily referred to problems of trust with respect to data handling, reiterating that "ethics, governance, and regulation will be essential, not only to ensure a positive relationship with the customer but also to for the stability of the financial system,” he concluded.