CBA’s boss Matt Comyn doubles down on artificial intelligence, says it improves fraud detection

Commonwealth Bank CEO Matt Comyn has labelled the use of AI a ‘huge priority’, saying the models it has employed have led to a 25 per cent boost in fraud detection.

Commonwealth Bank chief executive Matt Comyn has labelled the use of artificial intelligence a “huge priority” for the bank, saying the models it has employed have boosted fraud detection by 25 per cent.

Speaking at an AI event on Monday, Mr Comyn said the nation’s biggest bank with the help of Silicon Valley-based H2O.ai was using about 450 machine learning models and was constantly assessing several hundred billion data points.

“It’s clearly a huge priority and I think industries fundamentally are being reshaped, and digital and data play and an incredibly important role,” he added. “Looking at a very traditional area of financial institutions … managing fraud. You run a sort of traditional model against an AI model and actually the fraud detection rates are dramatically – I think about 25 per cent – better.

“There’s enormous potential to try and identify (scams) … ways that we can help serve up better predictors for customers to really try to create more friction and prevent customers from losing money in scams.”

Data security and privacy have been a top of mind issue in recent weeks given the mammoth data hack on Medibank Private, while scams became more prevalent during the pandemic.

Mr Comyn said data security and customer privacy were “at the forefront” of how CBA was using AI.

Data security and privacy have been a top of mind issue in recent weeks given the mammoth data hack on Medibank Private. Picture: AAP

But there are risks involved with AI. A recent study by the Alan Turing Institute, Britain’s national institute for data science and AI, found most UK regulators were badly unprepared for “the growing set of challenges and opportunities posed by the emerging tidal wave of AI innovation”.

An International Monetary Fund research paper last year said the accelerating AI shift would require efforts by regulators and industry to develop minimum standards and guidelines. It highlighted potential risks such as embedded bias in AI models and “greater homogeneity in risk assessments and credit decision”.

CBA is also using AI to provide its customers with targeted offers for shopping discounts and available government benefits.

CBA struck an alliance and bought a minority stake in H2O.ai a year ago, leading the latest $US100m funding round which gave the artificial intelligence company a pre-money valuation of $US1.6bn. The Series E raising was also backed by prior investor Goldman Sachs and new participant and growth equity firm Pivot Investment Partners.

H2O.ai founder and CEO Sri Ambati admitted at Monday’s event that all AI and data models had bias and said it was important for the industry to fix the “blind spot”. He advocated for building a global centre for responsible AI with input from global banks, telecommunications providers and policymakers.

Mr Comyn said in Australia CBA was one of four companies working on developing ethical principles for AI with the government.

He also noted engagement with the bank’s board of directors and regulators on the topic of AI.

“Our approach, how those models are supervised, how we manage for a whole range of different things to ensure that there’s explainability, there’s no bias,” Mr Comyn said. He highlighted that AI could assist in engagement during natural disasters and helping customers accessing government and other support.

H2O.ai founder and CEO Sri Ambati. Picture: Jason Henry

Mr Comyn said harnessing data and AI would help the bank in building services that were more efficient and accurate, and could also be used in the transition to net-zero emissions in areas like helping customers measure their carbon footprint.

Andrew McMullan, CBA’s data and analytics chief who sits on the H2O.ai board, said the bank had benchmarked a spate of other AI providers before sealing the partnership with H2O.ai.

“A H2O licence of using driverless machine learning capability is the equivalent to 10 data scientists,” he quipped.

Mr McMullan lamented the lack of data scientists in Australia and said CBA was seeking to use AI across many parts of its business, including involving executives in AI challenges to increase engagement with data.

He cited an exercise conducted at CBA of a customer campaign for shopping and cashback offers that showed an AI model set up by one of its managers led to a 500 per cent rise in customers engaging with the campaign, versus traditional methods.

“Business experience with the science is an incredible opportunity in every part of the organisation when you can connect those two things together,” Mr McMullan said. “We want to create the ability for every part of the organisation to use the capability we're building with H20 to make every single decision that they make … better.”

H2O.ai is the employer of the many of the world’s top data scientist and machine learning grand masters as measured by Kaggle, a community for data scientists.

The series E raising follows H2O.ai’s $US72.5m funding round in 2019, which reflected a $US400m valuation.

Originally published as CBA’s boss Matt Comyn doubles down on artificial intelligence, says it improves fraud detection