Hana Bank to roll out AI-powered irregularity monitoring system in H1

gettyimagesbank

Hana Bank plans to adopt an artificial intelligence (AI) system to monitor signs of financial irregularities, including fraud and embezzlement, the lender said Tuesday.

The system came amid criticism over internal control failures, as illustrated by over 7.4 billion won ($5.5 million) in improperly granted loans from 2021 and 2023.

A Hana employee approved the loans for operation funds and management to corporate borrowers for bribes. The case was missed by both the lender and the Financial Supervisory Service (FSS), since most of their review concerned irregularities in mortgages.

According to data submitted by Hana to Rep. Lee In-young of the main opposition Democratic Party of Korea, the lender is developing the AI system for real-time monitoring of lending practices.

An automatic alert will be sent to the bank's audit department if the level of risk concerning the loan amount surpasses a predetermined standard.

Hana will also strengthen document verification to identify attempted forgery and falsification.

For example, on-site inspections by loan officers will be mandatory to ensure loans based on false lease contracts are screened out.

“We believe the AI system will help us prevent financial fraud more efficiently,” a Hana official said.

“The human workers will be able to detect irregularities, enhancing efficiency in internal audits and monitoring. We plan to streamline our work process, aided by the AI analysis and training of employees to bolster prevention efforts.”

Meanwhile, NongHyup Financial Group and state-run lender Industrial Bank of Korea have embraced a whistleblower system in a move to prevent employee misconduct, including embezzlement and poor screening of loans.

Similarly, Woori Financial Group will have a dozen entry- and low-level employees monitor for and report any suspected irregularities to the group’s compliance office.