Richard Mccarthy

Start with the basics and see what’s possible: Richard McCarthy on AI in Australia today


February 17, 2020
Richard McCarthy

Start with the basics and see what’s possible: Richard McCarthy on AI in Australia today

AI for business outcomes

Artificial intelligence (AI) is part of an exciting mix of technologies already transforming the financial sector in Australia. At Perpetual Corporate Trust (PCT), we’re developing AI solutions to better support our clients’ digital transformation strategies – but we had to do a lot of work first.

PCT is the leading provider of corporate trustee services for the Australian managed funds industry and debt markets. Since 1997, PCT has run the Australian Data Warehouse for the financial services industry.

Today, we’re a bit like a fintech/regtech start-up. We’re using new technology to help us support financial services institutions’ digital agendas (fintech) and to manage regulatory processes in the sector (regtech). But the difference is that we’re more than 130 years old, and are a trusted brand with a strong balance sheet and deep client relationships. I think we’re showing that AI isn’t just for nimble start-ups.

Harnessing machine learning

In partnership with Microsoft, we have developed a portfolio of technology solutions focused on digitising and automating elements of regulatory risk and compliance reporting for the financial services industry.

We’ve used machine learning to build the Perpetual Business Intelligence platform, which analyses the performance of lenders’ mortgage portfolios and benchmarks them against the entire Australian mortgage market. The platform also offers a credit stress-testing module that streamlines Australian Prudential Regulation Authority reporting for financial services providers.

We’re also working on a predictive model that will enable treasury teams to optimise funding for their lending portfolios. And we’re developing a proof of concept where PCT will do the heavy lifting of processing clients’ unstructured data, so it can be standardised and used to meet their business reporting requirements.

As part of our collaboration with Microsoft we also featured in a new whitepaper called ‘Digitising Australian Financial Services with AI’. You can read the whitepaper here.

The role of the cloud

To develop our solutions, we had to have the basics right first. And for us, that meant being in the cloud. It’s important to modernise platforms, which includes moving more of your computing to the cloud under a full or hybrid approach. You can’t leverage data lakes, or AI and machine learning tools, unless you’re in a secure cloud-based environment.

In fact, I think migrating to the cloud is as big an issue for the financial services industry as AI itself. Privacy is paramount and compliance with the regulatory environment is critical. Having a clear, auditable trail is going to be key for overcoming any regulatory hurdles.

But this isn’t impossible. Australia’s legal framework and regulators have leaned into technology innovation and tend to be generally supportive, with a healthy level of protections and governance in place.

For financial services institutions to be in a position to use cloud technology, machine learning and AI in the future, it will be vital to get the basics right first. It will be a step-by-step process involving finding the right partners and providers, and then structurally moving data into a cloud-based environment that enables organisations to use tools that will benefit their business. It will take time, but I’m confident the pay-off can be significant.

For financial services institutions to be in a position to use cloud technology, machine learning and AI in the future it will be a step-by-step process involving finding the right partners and providers, and then structurally moving data into a cloud-based environment.

It will take time, but I’m confident the pay-off can be significant. My advice for organisations looking at AI is to be open to collaborating with other companies that can provide specialist expertise to support your business. I think that’s going to be the way forward for the finance sector.

Written by Richard McCarthy, Group Executive, Perpetual Corporate Trust


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