EY helps clients create long-term value for all stakeholders. Enabled by data and technology, our services and solutions provide trust through assurance and help clients transform, grow and operate.
At EY, our purpose is building a better working world. The insights and services we provide help to create long-term value for clients, people and society, and to build trust in the capital markets.
The Intersection of AI and Sustainability in Asean Banking
In the latest NextWave Banking in Asia-Pacific podcast, Sumit Narayanan (EY) and Karthik Shenoy (Bank of Singapore) discuss AI’s role in advancing sustainability, reducing environmental footprints, and promoting DEI in ASEAN banking.
In the latest episode of the NextWave Banking in Asia-Pacific podcast, EY Asean Financial Services Managing Partner Sumit Narayanan, and Bank of Singapore’s Managing Director and Head, Platforms & Integration, Karthik Shenoy, explore the growing synergy between artificial intelligence (AI) and sustainability in the ASEAN banking sector. The discussion highlights how banks are leveraging AI to advance sustainability initiatives, reduce their environmental footprint, and promote responsible practices across environmental, social and governance (ESG) dimensions. The conversation also delves into the social impact of AI, including enhancing diversity, equity and inclusion (DEI) through AI-driven recruitment platforms and career marketplaces.
Discover how AI is poised to drive systemic change in the banking sector, from optimizing energy usage in data centers to improving risk management and creating personalized sustainable investment portfolios. This episode provides valuable insights into the future of AI and sustainability, and the collaborative efforts needed to achieve long-term sustainability goals.
New research from EY and Bank of Singapore reveals the opportunities and challenges of AI in sustainability, highlighting initial priorities for banks in the region. Download the report here.
Key takeaways:
In this compelling discussion, the speakers tackle:
Understand how AI is driving sustainability initiatives in the ASEAN banking sector, focusing on reducing environmental footprints and promoting responsible ESG practices.
Learn how AI enhances DEI and supports personalized sustainable investment portfolios.
For your convenience, full text transcript of this podcast is also available.
Sumit Narayanan
Welcome to another episode of EY's Next Wave banking podcast, where we explore the latest trends and innovations, shaping the financial services industry.
Narayanan
I'm your host, Sumit Narayanan, managing partner, Asean financial services at EY.
Narayanan
Today we have a fascinating discussion lined up about the intersection of artificial intelligence and sustainability in the Asean banking sector.
Narayanan
Joining me is Karthik Shenoy, managing director and head of platforms and integration at Bank of Singapore.
Narayanan
Welcome, Karthik.
Karthik Shenoy
Thank you, Sumit. It's my pleasure to be here.
Shenoy
We're seeing a growing synergy between AI and sustainability in Singapore and across Asean, and I look forward to discussing how we are using AI to advance sustainability.
Narayanan
Absolutely. Let's start with an overview of how AI, a multifaceted technology, is significantly disrupting business models across various industries, especially the banking sector.
Narayanan
From our perspective at EY, AI is transforming the banking sector in many ways from enhancing custom experiences to improving operational efficiencies.
Narayanan
When it comes to sustainability, AI is playing a special role in helping banks, reduce their environmental footprint and promote sustainable practices.
Narayanan
For instance, AI driven analytics can optimize energy usage in data centers and machine learning algorithms can help banks, as the environmental impact of their investment portfolios. Karthik, from your perspective at Bank of Singapore, what are some examples where you've been integrating AI into your sustainability initiatives?
Shenoy
At Bank of Singapore, sustainability is rooted in responsible practices across environmental, social and governance dimensions. One of our key initiatives is the ESG copilot, which integrates external data from ESG rating providers with our internal client profiles to deliver valuable insights into portfolios.
Shenoy
Our ESG dashboard is live and we are now enhancing its accessibility via our GenAI platform. Second, on the social front, we leverage network detection techniques to combat financial crime. By analyzing proximity scores, we uncover connections among referred prospects and prioritized cases using adverse news and sentiment analysis. This platform recently earned us the best use of AI award at the regulation Asia event.
Shenoy
And lastly, in terms of governance, our compliance platform employs machine learning to identify high-risk client groups based on factors such as golden visa affiliations and rapid fund movements. Through semi- supervised learning, we initialize models with targeted profiles, detect similar actors, and effectively group them into risk-based clusters. There are other examples, but let me pause here so we can explore other topics.
Narayanan
Hey, congratulations on the award. I would like to delve more into the social impact of AI as well at EY we believe that AI can play a significant role in enhancing diversity equity and inclusion, by idetifying things like patterns of bias and promoting inclusivity. For instance, we have seen applications where AI driven recruitment platforms can help eliminate biases in the hiring process. Karthik, I would be interested to hear more from you on how Bank of Singapore has been using AI to promote social impact and DEI.
Shenoy
Our team is deeply committed to this, Sumit. They have adopted AI in two main areas. First, we use an AI-driven platform in the hiring process for our early talent programs to evaluate skill sets of candidates more objectively, you know, ensuring that we identify the best talent without biases. Second, we leverage our AI powered career marketplace, MOBI, MOBI, to offer employees personalized career growth recommendations. It empowers them to explore and assess not only current skill sets, but also, aspiring career parts through a skill's first approach. The platform highlights an individual's key strands and potential improvement areas ultimately facilitating access to career opportunities across the entire OCBC group.
Shenoy
And looking at the bigger picture, AI is poised to drive systemic change by fostering fairness, offering, you know, personalized career development and analyzing workplace dynamics, you know, to create a more inclusive environment. I think this is an evolving area and we I think this is an evolving area and we
Narayanan
That's very interesting to hear, Karthik. One of the things which is getting a lot of press nowadays is the carbon footprint of AI. At EY, we are aware that energy consumption of AI systems can be significant. By 2030 data centers are projected to account for four and a half percent of global energy usage. Kathik, how important do you feel it is to examine the carbon footprint associated with AI operations? How is Bank of Singapore addressing this?
Shenoy
That's a very important consideration, Sumit. You know, minimizing the carbon footprint of AI is a priority for us. We focus on energy efficient hardware and model optimization to reduce our energy consumption. Notably, our very own OCBC GPT platform does not rely on our normal processors, which continuously use more electricity. Instead, it leverages specific Microsoft infrastructures that only consume electricity when a user inputs a prompt, making it more energy efficient than typical searches. Recently, we conducted a case study on our travel-related carbon emissions, analyzing large data sets to uncover underlying trends.
Karthik Shenoy
While we achieved our objectives through more deterministic methods, the study highlighted the potential of AI to improve both efficiency and accuracy. With multiple third-party players in corporate travel like hotels and airlines, AI can effectively analyze public carbon data and integrate various data sets to identify inconsistencies that humans would find very challenging to detect. So we're making progress, but we recognize as much work ahead.
Narayanan
That's fascinating to you. Karthik, how you guys have been addressing the carbon footprint of your AI operations. Another area which is getting a lot of interest is sustainable investment. At EY, we have observed that AI can help investors assess ESG performance, detect green washing, and optimized portfolios based on sustainability criteria. How is Bank of Singapore using AI in this area?
Shenoy
An individual corporation like ours has its limitation in terms of impact and influence. But as a bank, we have the unique opportunity to broaden our reach and contribute beyond our inherents trends by channeling investments towards AI and sustainability. Our chief investment office identifies critical global mega trends, or what we like to call super trends, that empower our clients to make informed decisions on pressing issues such as a clean energy transition and the demographic shifts associated with an aging global population. We provide tailored investment portfolios that align with our client's sustainability interests, their financial objectives, and our house recommendations. And in addition to these internal initiatives, we actively collaborate with our ecosystem partners, such as financial institutions and like-minded organizations to amplify our efforts in promoting impactful sustainability products.
Shenoy
A notable example of this is our recent paper with EY, which delves into the intersection of AI and sustainability. So together with our partners and clients, we are paving the way for a more sustainable future.
Narayanan
The integration of AI and sustainability research and analytics is transforming how institutions operate, make decisions and engage with their clients. We've seen some financial firms leverage AI to improve risk management in align investment strategies with sustainability goals as well. I would love to hear Karthik, how, from your perspective, AI can be used in research and analytics.
Shenoy
Yeah, this is something we've been experimenting at Bank of Singapore. It all started with the release of our OCBC GPT platform that I mentioned earlier, which saw significant improvement in in productivity. We have since developed a range of other systems such as our AI assisted product copilot for RMs to interact with our product shelf. And through external partnerships, we leverage AI to extract unique insights from vast volumes of artifacts and documents, enhancing our analyst efficiency in their research. And coming to the analytics front, we use AI extensively for risk detection and management.
Shenoy
Each day we process over 300,000 emails and chats, integrating that data with more than 50,000 trade events, and then allowing us to run contextualized machine learning driven searches to identify areas that require deeper investigation. You know, think of it as transitioning from basic sample testing, which used to be the norm and is inherently limited to comprehensive testing that accurately highlights cases that need scrutiny.
Narayanan
That's interesting. It's clear that AI does have a significant impact on sustainability in the banking sector. At EY, we work very closely with banks to integrate AI into their sustainability frameworks as well. We've seen great success in both developing AI models that can predict and manage climate related risks and assessed in creating AI power tools that track and report on sustainability metrics, ensuring compliance with regulatory requirements and enhancing transparency. Our responsible AI framework also ensures that these technologies are implemented thickly and sustainably.
Narayanan
Had there been some challenges you've observed in adopting AI for sustainability in the work you've been doing?
Shenoy
Yeah, given it's an emerging area, there are many challenges, but maybe I'll cover three big ones. In the first one would be data quality and availability. AI systems, they obviously require high quality relevant data for accurate analysis and decision making. Unfortunately, gaps in comprehensive data on environmental impacts, customer behavior, sustainability metrics, can undermine trust in AI.
Shenoy
To overcome this, banks must invest in robust data management practices, establish partnership with data providers, and collaborate with regulators to enhance data governance and protection. I think this will create a more reliable data ecosystem for sustainability initiatives. The second significant challenge I see is the is a shortage of skilled talent needed to develop and manage AI systems effectively. The rapid evolution of AI has meant that many professionals may lack the necessary expertise. To address this, banks need to prioritize ongoing investment in training and development, fostering a culture of continuous learning to equip employees with the skills needed for AI implementation.
Shenoy
And thirdly, I also think there's a stronger need for ESG related incentives, you know, within the financial industry. By aligning incentives with sustainability goals, we can cultivate a deeper commitment to sustainable practices, which in turn will facilitate the broader adoption of AI into sustainability.
Narayanan
That's very well, said Karthik. I think despite these challenges, the future of AI in sustainability looks very promising. At EY, we anticipate that AI will continue to evolve creating new opportunities for sustainable development. For example, using AI tools to aid discovery of advanced materials for carbon capture and storage, and predictive analytics can help manage climate risks as well. Karthik, what are your thoughts on the future of AI and sustainability, any initiatives we can expect in the future from the Bank of Singapore.
Shenoy
It's highly promising and multifaceted, as you just said. And I think it'll influence three aspects, you know, from processes to products and to people. Firstly, on the process front, we will increasingly hardness AI to enhance our ESG risk assessments by analyzing vast amounts of unstructured data. This will not only improve transparency in reporting, but also build trust among clients as a result. Second, on the products front, banks like ours will leverage AI to create more personalized offerings that promote sustainable behaviors. You know, products like green mortgages, carbon offset products, eco-friendly credit lines, and such. And lastly, I think coming to people, AI will deliver tailored insights into spending habits, you know, carbon footprint, sustainability practices, and perhaps incorporate gamification to make reward and investment choices more eco-friendly. So it's clear that AI is not just some passing trend. It's a transformative force that we are committed to integrating into our sustainability operations.
Narayanan
Indeed. I mean, as we've kind of elaborated, the future does look very promising for AI. As these technologies continue to advance, I think we will see even more in a bit of applications that drive sustainability in the banking sector and potentially other sectors as well. For instance, AI could enable some more precise carbon footprint tracking and help banks develop new green financial products, as you mentioned, some of them just now. The key here, I think, will be to ensure that these technologies are used responsibly and ethically, with a focus on long-term sustainability goals. This has been a hugely insightful chat, so far, Karthik. I really do appreciate you taking the time. Before we wrap up, do you have any final thoughts or advice for our listeners?
Shenoy
I've enjoyed being here too, Sumit, and I agree AI will significantly enhance sustainability efforts, and I look forward to witnessing new use cases and innovations that lie ahead. Like with most emerging areas, I think it's important to start small, pilot new initiatives and scale up as you gain more experience and confidence in the technology.
Narayanan
I fully agree with you, Karthik. I think collaboration will be so key as well. Collaboration with industry peers, regulators and technology providers, sharing best practices and moving forward in the journey towards common standards for sustainable AI.
Shenoy
You said it, Sumit, it will help right shift the thinking from doing less harm to doing more good.
Narayanan
Thank you, Karthik for joining us today and sharing your valuable perspectives. and thank you to our listeners for tuning in to this episode of Next Wave banking. Be sure to subscribe on Spotify and Apple Podcast to state updated on the latest trends in the financial services industry. Until next time, I'm Sumit Narayanan and this has been EY's next wave banking podcast.
