AI, Blockchain, Bio-metrics, Advanced Data Analytics and more will all be needed to combat "Deep Fake" loan and grant applications in Development Finance

Look at the media discussion of AI at present. It is dwelling on job losses, organisational change, efficiency of content creation for marketing and copy. Every now and then you will see a piece on how"deep fake" outputs are already being used to manipulate politics, and produce pornography.

As always the arms race of technology has the potential for bad as much as good. Be sure that those clever people who are operating global scams to persuade you to marry them and invest in bitcoin are already deploying AI. Their fearsome intelligence is already looking for other lucrative gaps in the market where people and organizations can be separated from their money because they simply cannot believe that what is happening to them is a sophisticated fraud.

I am concerned about Development Finance. Money flows from rich to poor in a process where the need to hit development outflow targets is managed through an (electronic) document based bureaucracy, backed up with very low penetration audits. The bureaucracy depends on painfully developed processes that are very slow to change. A well written funding application backed up with entirely predictable documentation presented by intelligent motivated entrepreneur is very well received.

AI can very easily prepare an application, a business plan, years of consistent numbers backed up with convincing documents. The depth of quality that is possible is very likely to pass the checks that currently exist. Finding people to play the role of management on a conference call, and setting up for the site visit will perhaps one of the easier parts of the fraud.

So, development organisations need to be seeing AI as a clear and present danger and already adapting. AI can be used as well to combat potential frauds. Applications and data analytics already exist to spot inconsistencies not only in data, but also in images, water marks. Blockchain offers the way to ensure veracity and authenticity of documentation.

The range of actions for any funding organisation is long. There are going to be painful and embarrassing losses. It would be very foolish to imagine that this kind of fraud will take time to arrive in the Development Finance space. We need to act now