AI’s Hidden Cost: How Financial Institutions Are Gambling with Data – and Losing

Wazzup Pilipinas!?

Hitachi Vantara’s 2024 Report Exposes a Looming Crisis in BFSI AI Adoption

Artificial intelligence (AI) is revolutionizing the Banking, Financial Services, and Insurance (BFSI) industry. It promises faster transactions, fraud detection, and automation at an unprecedented scale. But beneath the surface, a storm is brewing.

84% of BFSI leaders fear catastrophic data loss as AI strains legacy infrastructure. 41% say AI is already critical to their operations, yet many are hurtling forward without the data resilience to support it. The result? AI models that fail, security risks that skyrocket, and financial institutions playing an increasingly dangerous game with trust, compliance, and stability.

This is the stark reality revealed in The State of BFSI Data Infrastructure in 2024: AI’s Hidden Cost of Poor Data Quality, a new report by Hitachi Vantara. Based on insights from 231 BFSI specialists, C-level executives, and IT decision-makers across 15 countries, the findings paint a troubling picture:

Data is accessible only 25% of the time when needed

AI models in BFSI are accurate just 21% of the time

36% of leaders fear AI-caused data breaches, while 38% worry about ransomware wiping out their data

32% believe AI-enabled cyberattacks could be the next major security crisis

These numbers expose a dangerous disconnect: AI is being deployed at breakneck speed, yet the financial sector’s data infrastructure is woefully unprepared to support it.

The Cost of AI Failure: A Threat to the Very Core of Banking

Trust is the foundation of the financial industry. When customers deposit money, take out loans, or invest, they assume their bank is operating with precision, security, and reliability. But what happens when AI, designed to enhance operations, becomes a liability?

Mark Katz, CTO of Financial Services at Hitachi Vantara, puts it bluntly:

“The business model in financial services is inherently tied to trust. If a chatbot discloses sensitive customer data because it was included in the training set, the repercussions could be devastating. Worse, if AI produces hallucinated financial insights and a customer acts on bad data, who is liable? The risk is enormous.”

It’s not just theoretical. 71% of BFSI institutions admit they are testing AI in live environments rather than controlled sandboxes. This means financial institutions are experimenting on real customer data, in real-time, with real consequences.

And when something goes wrong?

One wrong AI-generated decision could trigger regulatory penalties

A single security breach could destroy consumer trust overnight

An AI failure in fraud detection could cost millions in financial loss

The BFSI sector isn’t just flirting with risk—it’s walking a razor’s edge.

The Road to AI Resilience: How BFSI Leaders Can Regain Control

Hitachi Vantara’s report doesn’t just diagnose the problem—it provides a blueprint for building an AI-ready data infrastructure that is secure, reliable, and sustainable.

1. Responsible AI Experimentation: Stop Testing on Live Data

AI must be trained and refined in controlled sandbox environments—not in live banking systems where mistakes can cause irreparable damage. 42% of BFSI leaders are still learning AI through experimentation, but without proper safeguards, they are setting themselves up for disaster.

2. Sustainability at Every Level: AI Can’t Succeed on Fragile Infrastructure

AI demands massive computing power and data storage, which strains outdated systems. Institutions must adopt energy-efficient, scalable infrastructure to ensure AI doesn’t just work today, but remains viable for the future.

3. Simplify, Unify, and Secure

BFSI companies often run AI models in hybrid environments with disconnected data platforms. This complexity increases security risks. To fix this, financial institutions must:

Unify data management systems

Automate security monitoring

Use encrypted, self-healing storage

4. AI as a Defense, Not Just a Risk

AI itself can strengthen security if used correctly. Advanced AI-driven threat detection can identify potential breaches before they happen, while immutable data backups ensure ransomware can’t erase critical records.

The Clock Is Ticking: Will Financial Institutions Adapt or Collapse?

The BFSI sector is at a crossroads. AI is here to stay, but rushing forward without an AI-ready data infrastructure could cripple institutions rather than empower them.

The choice is clear:

Double down on AI without fixing data governance and risk a catastrophic collapse

Invest in AI resilience, strengthen security, and turn AI into a long-term asset

There is no room for hesitation. The financial world’s future depends on how it handles data today.

AI will transform finance—but only for those who prepare. Will your institution be ready?

About "WazzupPilipinas.com"

WazzupPilipinas.com is the fastest growing and most awarded blog and social media community that has transcended beyond online media. It has successfully collaborated with all forms of media namely print, radio and television making it the most diverse multimedia organization. The numerous collaborations with hundreds of brands and organizations as online media partner and brand ambassador makes WazzupPilipinas.com a truly successful advocate of everything about the Philippines, and even more since its support extends further to even international organizations including startups and SMEs that have made our country their second home.