# Data: Fake will be the new real in financial services in 2023 Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-12-22 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: Synthetic Data: The Future of Data Privacy in Financial Services Meta Description: Discover how synthetic data can drive speed to innovation within financial services, solve privacy compliance issues, and enable effortless cloud migration in URL: https://financedigest.com/data-fake-will-be-the-new-real-in-financial-services-in-2023html ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1409494459-1736814693378-compressed.jpg) ![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/harry-keen-1736814693359-compressed.jpg) _By_ **_Harry Keen,_** _CEO & Co-Founder, Hazy_ Data drives valuable innovation in an increasingly digital [financial services sector](https://www.financedigest.com/iot-for-the-financial-sector.html "IoT for the Financial Sector"). For many companies, privacy fears and [compliance headaches are turning](https://www.financedigest.com/turning-big-data-compliance-into-a-competitive-advantage.html "TURNING ‘BIG DATA’ COMPLIANCE INTO A COMPETITIVE ADVANTAGE") valuable datasets into white elephants. They’re too risky to put to work, too precious to let go and far too [costly to leave](https://www.financedigest.com/analysis-euros-20-year-low-leaves-ecb-facing-costly-choices.html "Analysis-Euro’s 20-year low leaves ECB facing costly choices") sitting idle. However, as many of these institutions are still sweating old IT assets, they are laggards when it comes to technology, innovation and the speed at which they can [digitally transform](https://www.financedigest.com/redefining-the-human-touch-with-data-driven-digital-transformation.html "Redefining the human touch with data-driven digital transformation"). And with increased regulatory pressure, [cybersecurity threats](https://www.financedigest.com/forescout-and-fireeye-expand-partnership-enabling-faster-response-to-cybersecurity-threats.html "FORESCOUT AND FIREEYE EXPAND PARTNERSHIP, ENABLING FASTER RESPONSE TO CYBERSECURITY THREATS") and increasing rates of customer concern, they cannot risk not driving the valuable innovation needed to improve automation, decision-making and data security It’s time to turn to synthetic data. This is ‘artificial’ data generated digitally using algorithms that maintains the same statistical properties of ‘real’ data. Whether the aim is to make data available across an organisation or accessible to third-party partners, it drives speed to innovation within [financial services](https://www.financedigest.com/can-financial-services-brands-ever-be-credible-on-social.html "Can financial services brands ever be credible on social? "). Synthetic data already plays an important role in the [future of banking](https://www.financedigest.com/bank-of-england-officials-split-over-future-path-for-rates.html "Bank of England officials split over future path for rates"), and I believe this will only accelerate in 2023. Access to meaningful [customer and transaction data](https://www.financedigest.com/manchester-arts-centre-the-lowry-selects-logpoints-siem-technology-to-safeguard-customer-data.html "Manchester arts centre The Lowry selects LogPoint’s SIEM technology to safeguard customer data") is getting more restricted. Growing cybersecurity concerns and increasing legislative pressure are only some of the reasons. Legacy [systems represent a mounting challenge](https://www.financedigest.com/from-fragmented-systems-to-unified-cpm-unicredit-prepares-for-todays-finance-challenges.html "FROM FRAGMENTED SYSTEMS TO UNIFIED CPM – UNICREDIT PREPARES FOR TODAY’S FINANCE CHALLENGES") to data architectures and customers demand digital personalization and privacy simultaneously. Synthetic data can solve all these issues and more in 2023. **Supercharging** [data privacy](https://www.financedigest.com/tesla-to-warn-of-data-privacy-risk-from-car-security-cameras-in-germany.html "Tesla to warn of data privacy risk from car security cameras in Germany") [According to Gartner](https://www.gartner.com/en/articles/you-ll-be-breaking-up-with-bad-customers-and-9-other-predictions-for-2022-and-beyond), synthetic data will enable organisations to avoid 70% of privacy violation sanctions. [Financial data](https://www.financedigest.com/data-centres-and-the-changing-financial-trading-landscape.html "Data centres and the changing financial trading landscape"), such as consumer transaction records, account payments, or trading data, is sensitive personal data subject to data protection obligations, and is often commercially sensitive. [Financial services](https://www.financedigest.com/how-crowdsourcing-can-help-drive-the-benefits-of-advanced-analytics-in-financial-services.html "HOW CROWDSOURCING CAN HELP DRIVE THE BENEFITS OF ADVANCED ANALYTICS IN FINANCIAL SERVICES") data is (quite rightly) highly regulated, because of the sensitive nature and volume of personal information within data sets. But this regulation does make sharing of [data difficult between financial institutions](https://www.financedigest.com/how-can-financial-institutions-make-the-most-of-data-for-their-business.html "HOW CAN FINANCIAL INSTITUTIONS MAKE THE MOST OF DATA FOR THEIR BUSINESS?  ") and those trying to innovate and solve the challenges of fraud and financial crime, for example. Synthetic data is not tied to a real individual and does not contain any real personal information. As no real individuals can be identified from the synthetic data, [data protection](https://www.financedigest.com/4-steps-you-should-be-taking-to-protect-data.html "4 Steps You Should Be Taking To Protect Data") obligations, such as GDPR, do not apply. This will undoubtedly be [top of mind in 2023 for business leaders](https://www.financedigest.com/young-leaders-forum-niamh-corbett-shares-her-top-5-tips.html "Young Leaders Forum: Niamh Corbett shares her top 5 tips"), with the fifth anniversary of GDPR in May. This means [data can be more easily shared](https://www.financedigest.com/shares-steady-dollar-gains-ahead-of-u-s-inflation-data.html "Shares steady, dollar gains ahead of U.S. inflation data") for collaboration on some of the major industry challenges. Since privacy compliance and information security regulations will not be an issue, the synthetic data generated can then be used to create new revenue streams, allowing [financial institutions to take their Open Data](https://www.financedigest.com/big-data-analytics-fraud-prevention-in-the-financial-sector.html "BIG DATA, ANALYTICS & FRAUD PREVENTION IN THE FINANCIAL SECTOR") and data monetization strategy even further in 2023. **Effortless** [cloud migration](https://www.financedigest.com/a-cloud-migration-guide-for-financial-institutions.html "A Cloud Migration Guide for Financial Institutions") [Banks and financial](https://www.financedigest.com/financial-crime-is-the-chink-in-the-banks-armour.html "Financial crime is the chink in the banks’ armour") institutions often miss out on innovative technologies, such as machine learning and cloud AI, because uploading sensitive data to cloud platforms is just out of the question for policy reasons. A synthetic version of a sensitive dataset can stand in here. Pseudo-anonymized data created by traditional processes, such as anonymization, can still lead to re-identification or redacted data that loses most of its utility. Instead, with synthetic data generation, the dataset is new and holds no ties to the original. If used, in 2023, [financial services](https://www.financedigest.com/financial-services-firms-turn-to-big-data-intelligence-to-fight-fraudulent-activity-according-to-xerox-study.html "FINANCIAL SERVICES FIRMS TURN TO BIG DATA INTELLIGENCE TO FIGHT FRAUDULENT ACTIVITY ACCORDING TO XEROX STUDY") can train on their real datasets on-premise – even behind the walls of separate departmental silos. The [artificial data](https://www.financedigest.com/theres-nothing-artificial-about-the-role-of-ai-and-data-in-the-finance-industry.html "There’s nothing artificial about the role of AI and data in the finance industry ") can then be released into the cloud. And as the synthetic data contained no real information, [security teams will be able to sign off the cloud usage of this data](https://www.financedigest.com/2023-fintech-prediction-secure-and-private-data-usage-is-key.html "2023 FinTech Prediction: Secure and Private Data Usage is Key") immediately. Any financial organisation that is looking to be more competitive and benefit from the flexibility of the cloud whilst [avoiding lengthy projects and the risk of using real customer data style=”font-weight: 400;”>](https://www.financedigest.com/the-race-to-avoid-data-dinosaur-extinction.html "THE RACE TO AVOID DATA DINOSAUR EXTINCTION")[will need to use synthetic data in cloud migration projects.  Something that financial organisations can use to great effect in 2023 to survive in today’s trying times.](https://www.financedigest.com/the-race-to-avoid-data-dinosaur-extinction.html "THE RACE TO AVOID DATA DINOSAUR EXTINCTION") [**The commercial impact of generative AI**\ \ Generative AI underwent a huge step change in the latter half of 2022. Teams from OpenAI through to StabilityAI have been creating models that can replicate hyper-realistic text and images from seemingly thin air with little to no verbal prompts. In fact, the realism of response you can get from these models is almost hard to believe, and like nothing we’ve seen prior to this year.](https://www.financedigest.com/the-race-to-avoid-data-dinosaur-extinction.html "THE RACE TO AVOID DATA DINOSAUR EXTINCTION") [This development is undoubtedlygoing to impact business and society. But how? It’s actually not clear, but what we do know is that these teams are making these models available for anyone to play with for free right now. This will createthe perfect test](https://www.financedigest.com/the-race-to-avoid-data-dinosaur-extinction.html "THE RACE TO AVOID DATA DINOSAUR EXTINCTION") [ecosystem for developers](https://www.financedigest.com/avaloq-enlarges-innovation-ecosystem-through-launch-of-developer-portal.html "Avaloq enlarges innovation ecosystem through launch of developer portal"), hackers and anyone who wantsto try their ideas. I am certain that in 2023 we will start to see businesses forming around these tools. We have already seen examples of text or formula auto completion tools being embedded into [Microsoft Office](https://www.financedigest.com/microsoft-unveils-ai-office-copilot-in-fast-moving-race-with-google.html "Microsoft unveils AI office copilot in fast-moving race with Google") software that could revolutionize productivity and speed up learning curves of users. And those types of revolutionary tools can [impact more businesses than just those in financial services](https://www.financedigest.com/trends-in-the-financial-service-landscape-and-the-impact-on-fraud.html "Trends in the financial service landscape and the impact on fraud") Although exciting, there are certainly concerns and legal [challenges that still need to be overcome](https://www.financedigest.com/5-challenges-to-overcome-in-governance-risk-and-compliance-magazine.html "5 Challenges to Overcome in Governance, Risk and Compliance-Magazine") before this technology can be commercialized. Who owns the output of one of a code auto completion model if it was [trained on data under different licences](https://techcrunch.com/2022/12/08/github-launches-copilot-for-business-plan-as-legal-questions-remain-unresolved/)? Who owns the copyright to images generated from a model [trained stock images under different licences](https://mpost.io/shutterstock-and-getty-images-bans-ai-generated-content-over-fears-of-legal-challenges/)? We are still in the early adopter phase of this exciting technology. And despite the challenges discussed in this piece, its potential should not be underestimated, and I cannot wait to see and be a part of all the developments and uses of synthetic data in 2023. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---