Brighty App’s CTO on Three Areas in Crypto Banking to Be Most Impacted by AI

• Nikolay Denisenko, a co-founder of Brighty App and former Lead Backend Engineer at Revolut who developed Revolut Business, shares his vision of using AI in crypto banking.
• Some experts caution about the potential pitfalls of introducing AI into the financial world, but there are strong advocates who believe in its transformative potential.
• Denisenko discusses an AI-powered feature to be integrated with Brighty, client onboarding using AI, and user acceptance.

Where there is data, there is room for artificial intelligence (AI). Hence, it seems AI finds a perfect fit in finance, as it’s primarily a data-driven sector. Despite some experts warning against its use, there is a growing consensus that AI can significantly enhance certain aspects of financial operations.

Its strengths, coupled with human oversight, appear to make AI not just palatable but advantageous in banking. Therefore, it’s not a question of whether we should embrace AI in finance but how we can do so responsibly.

CCN caught up with Nikolay Denisenko, a co-founder and Chief Technical Officer at Brighty App. Brighty App is an all-in-one finance app that lets users link their crypto accounts to their digital or physical Brighty card, and pay seamlessly anywhere that accepts Visa.

A tech guy at his core, as he refers to himself, Denisenko is a techpreneur with over a decade of experience in applied mathematics, business process management, and developing applications. Convinced of AI’s transformative potential, he is now working on the integration of AI-powered tools with Brighty App.

Customer Experience Is in the Limelight

Denisenko expects that in the near future, AI will be an integral part of crypto banking. According to him, security, customer service, and operational efficiency will be most impacted by AI.

“Advanced threat detection and predictive analytics will improve security, identifying fraudulent activities, and preventing breaches in real-time. AI-powered chatbots and virtual assistants will provide 24/7 customer support, offering personalized experiences and guiding users through any initial issues they encounter,” he says.

His vision aligns with recent research showing that IT, customer support, and security teams find great potential in integrating chatbots in their workflows. These divisions are perpetually on the hunt for innovative ways to streamline processes.

That said, in 2022, 88% of users had at least one conversation with a chatbot. This trend is expected to continue to grow exponentially in the coming years, with one in four businesses primarily relying on chatbots for handling customer service inquiries by 2027.

Denisenko suggests that crypto platforms can enhance customer experience by leveraging AI to provide highly personalized services and round-the-clock support:

“AI can analyze customer data to offer tailored financial advice, customized investment portfolios, and personalized savings plans. This is a feature that we are working on integrating with Brighty as well. Depending on the users’ risk preferences, which are identified through a series of curated questions, the AI chatbot helps curate a custom investment portfolio,” shared Denisenko.

“Similarly, AI-powered chatbots and virtual assistants can handle a wide range of inquiries and issues efficiently, ensuring customers receive prompt assistance anytime. This will help improve customer satisfaction,” he continued, adding:

“AI also simplifies the onboarding process by automating identity verification and compliance checks, which is usually the area where users need the most support. By reducing the time and effort required for customers to set up new accounts, AI can help provide a smoother and faster onboarding experience.”

Denisenko also pointed out that AI can create more sophisticated, intuitive interfaces that can understand and respond to user needs effectively. He said that more advanced AI can create user-friendly interfaces in the form of personalized dashboards that display relevant financial information, making it easier for customers to manage their finances:

“The technology can offer educational resources to improve financial literacy, helping customers make informed decisions. Overall, AI can significantly improve user experience if implemented in the correct places during the customer flow.”

“In terms of risk management and compliance, AI can help maintain compliance with anti-money laundering and KYC requirements. AI-driven algorithms will enhance trading strategies by analyzing market trends and executing trades at optimal times. Virtual advisors will make investment opportunities more accessible by offering tailored advice based on individual risk profiles,” Denisenko elaborated.

Proof-of-uniqueness and Proof-of-identity

There is indeed quite a hustle in the financial sector, as projects have been falling over themselves in the race to marry artificial intelligence with their offerings. Yet, as is common with such hasty unions, complications are inevitable.

As we tread further into the field of AI, unanticipated issues and bugs can result in substantial monetary losses, let alone bad actors using AI for financial crime. Last year, 51% of financial organizations reportedly lost $5 million to $25 million in total to AI-driven threats.

With that, only a third of anti-fraud decision-makers said fraud and financial crime were handled with cross-collaboration while still in separate units. Others function independently, lacking interaction or joint efforts.

It leads to a suggestion that there is a need for enhanced information sharing among financial institutions. This could prove to be a powerful tool in the ongoing battle against fraudulent activities. Reflecting on this, Denisenko opined:

“AI technology is getting more sophisticated by the day. But like any technology, there will be instances where there are glitches or errors—this is inevitable, and it is how we tend to advance.”

“When it comes to information sharing, on the one hand, enhanced collaboration can provide a wider view of potential risks, allowing for more effective prevention and detection of fraudulent activities,” he said, and shared further:

“Still, this must be carefully balanced with data privacy and security concerns, ensuring that shared information is protected and used responsibly. One of the main benefits of blockchain technology and the use of digital assets is the anonymity and lack of intermediaries that comes along with it.”

“At the end of the day, I think, users should have a choice between using regulated and thus, potentially less risk-prone financial services but compromise on their anonymity, or opt to keep away from intermediaries and KYC processes as a whole.”

Denisenko continued pointing out that in cases within the fintech industry where client onboarding must happen, fraudulent activity can be combated by having strong security partners in place, as well as a human support team that can double-check any questionable information:

“Companies must be vigilant and use advanced verification techniques and cross-reference multiple data points to ensure authenticity. There are projects within the blockchain industry that are already working on fighting the use of synthetic identities by introducing concepts such as proof-of-uniqueness or proof-of-identity as a consensus mechanism.”

Synthetic identities are fabricated identities often used for illicit purposes. These are not stolen identities, rather, they are completely made up, which has become easier with the development of AI. They camouflage themselves amid genuine identities, making it tricky for organizations to detect. Based on the insights from Veriff, synthetic identity fraud dominated in 2023, accounting for a staggering 85% of all fraud.

‘Problems Slipping Through the Cracks’

While there is no denying the potential of merging AI with crypto banking, it’s not devoid of obstacles. According to Denisenko, one such issue is that AI systems can perpetuate biases present in the data they are trained on, leading to biased results.

This inherent problem is a manifestation of the “garbage in, garbage out” principle: if a model is fed biased input, it will produce biased output, such as privileging one arbitrary group of users over others. Biased AI systems can lead to unfair or discriminatory outcomes that may harm individuals.

“Technical expertise is essential for the successful implementation of AI, which means there is a need to recruit and retain skilled AI professionals. As a whole, developing, implementing, and maintaining AI solutions is resource-intensive, requiring substantial financial and human resources. If you are a smaller start-up with resource challenges, implementing AI might not be a viable option,” says Denisenko.

“Besides this, there is the issue of regulatory compliance. AI systems require large amounts of data, raising concerns about protecting sensitive customer information and complying with data protection regulations like GDPR,” Denisenko continued, adding:

“On top of this, depending on the crypto platform, AI technology must also help ensure compliance with AML and KYC requirements. We spoke earlier about the risks involved with this, given that AI is still in development and there is potential for problems slipping through the cracks.”

Denisenko further added that it’s not just about embracing the tech-savvy early adopters but also about allaying the fears of those hesitant due to the absence of human involvement in their financial dealings:

“User acceptance is also an area of concern. While a large portion of crypto users are early adopters and technologically advanced, some may still be wary of AI solutions and the lack of human interaction, especially when it comes to their finances. Educating users and being transparent about AI processes can help mitigate these concerns.”

Denisenko highlighted that the savvier traditional banks are already learning and implementing AI technology when it comes to customer service and virtual assistance, but there is always room to grow. He said that TradFi should learn from crypto digital banks’ use of AI by closely monitoring what is happening in the fintech space, specifically DeFi, and be open to changes.