AI outpacing traditional audit systems, say bankers

Financial sector players have warned that traditional audit and governance frameworks are becoming inadequate as artificial intelligence rapidly transforms banking operations, risk management, and fraud detection in Nigeria’s financial system.

The warning was issued in Lagos at the 64th Quarterly General Meeting of the Association of Chief Audit Executives of Banks in Nigeria (ACAEBIN), where senior bankers, regulators, and internal audit professionals discussed emerging risks in AI-driven financial services.

The meeting with the theme “Internal Audit Function in the AI Era,” centered on the need for audit functions to urgently modernise to remain effective in an increasingly digital banking ecosystem.

Delivering a keynote address on behalf of the Group Managing Director and Chief Executive Officer of United Bank for Africa (UBA), Oliver Alawuba, the Executive Director of Finance and Risk Management, Ugochukwu Nwaghodoh, warned that traditional audit methods can no longer keep pace with the speed and complexity of modern banking systems.

He said artificial intelligence is already reshaping core banking operations, including fraud detection, credit underwriting, transaction monitoring, and customer service.

“Artificial intelligence is no longer a distant conversation. It is already reshaping how banks serve customers, detect fraud, underwrite risk, automate operations, monitor transactions, manage data, and compete,” he said.

He added that financial systems are now operating in real time, where decisions are made in milliseconds and cyber threats are increasingly automated.

“The banking environment is evolving into one where decisions are made in milliseconds, cyber threats can be robotized, fraud can be scaled through automation, and deep fakes can compromise identity,” he warned.

According to him, traditional audit approaches such as sampling, periodic review, manual controls, and post-event checks are no longer sufficient on their own.

“Traditional audit approaches, however useful, will not be sufficient. Sampling alone will not be enough. Periodic review alone will not be enough. Manual controls alone will not be enough,” he said.

He described internal audit as the “independent conscience” of the financial system and stressed its importance in strengthening institutions and protecting customers.

Earlier, Chairperson of ACAEBIN, Aina Amah, said artificial intelligence is both an opportunity and a risk for the banking industry.

She noted that AI is transforming banking operations, including risk management, fraud detection, customer engagement, and decision-making.

“Artificial intelligence is transforming banking operations, risk management, fraud detection, customer engagement, and decision-making,” she said.

However, she warned that it introduces new risks around governance, ethics, cybersecurity, data quality, and model reliability.

“While it presents significant opportunities, it also introduces new risks relating to governance, ethics, cyber security, data quality, and model reliability,” she said.

She urged auditors to evolve their skills and adopt new tools to remain relevant in a fast-changing environment.

“As internal auditors, we must evolve alongside this development,” she said.

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