Although the financial industry’s awareness of the need to use machine learning to bolster its cybersecurity has existed for several years, focused work on such endeavors is just beginning, as Erica Choinski, the new chair of industry operations group ISITC, sees it.
As ISITC prepares the agenda for its 23rd annual vendor show in Boston beginning March 26, the group plans to devote time to hear about members’ progress on applying machine learning to defend against cyber intrusions, says Choinski, vice president at Brown Brothers Harriman & Co. She succeeded Jeff Zoller, whose three-year term as ISITC chair ended in December.
“The key is to make sure people understand machine learning’s potential for good and bad, so to speak. To guard against future cybercrime, it’s conceivable that a machine learning platform might be used to help catch the type of nefarious transactions that it creates,” says Choinski.
The ties between machine learning and cybercrime or cybersecurity have emerged as a topic ISITC will cover in sessions looking at the future of machine learning in financial services more generally, according to Choinski.
“Increasingly, machine learning technology can help identify and flag transactions that are anom-alous relative to historical transaction patterns,” she says. “For example, we can leverage this technology for quicker identification of manual errors, fraudulent messages or money laundering activity. The ability to do this without a significant clawback on all the gains in STP [straight-through processing] over the past 20 years will be critical.”
ISITC’s show agenda will also cover blockchain, third-party risk management and regulatory compliance concerns.
“ISITC aims to collaborate with other industry groups around the deployment of blockchain technology in support of key operational workflows,” says Choinski. “In part, an important role ISITC can play is in the promotion of different applications of this technology to drive opera-tional efficiency and the establishment of market practice standards as needed.”
Third-party risk management, defined as investment and securities firms’ management of the service providers they use, is ripe for an updated definition of best practices, according to Choinski. “There is an opportunity for ISITC to have a bigger voice in defining how best to man-age the pockets of risk associated with third-party providers,” she says.
With the upcoming change in US presidential administrations, the regulatory climate for the fi-nancial industry is likely to change to some extent, although the nature of changes is not yet known. ISITC has long had a regulations working group to assist its members on compliance is-sues, and its March agenda will feature a keynote address by David Gergen, a CNN analyst and co-director at Harvard University’s Kennedy School who served as an advisor to presidents Nixon, Ford, Reagan and Clinton.
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