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A new report has flagged risks associated with the implementation of AI technology, which could be inhibiting financial services firms from reaping the benefits of efficiency improvements.
The World Economic Forum has released a new report in collaboration with Deloitte – Navigating Uncharted Waters – which identified risks associated with the adoption of artificial intelligence (AI) systems by financial institutions.
Risks cited in the report include:
- Difficulties explaining AI processes: Some forms of AI may be difficult to interpret, even by their creators, posing concerns for financial institutions and regulators who are unsure how to trust solutions they cannot understand or explain.
- Algorithmic bias: Concerns that AI systems may develop unintended biases over time, which, when combined with their opaque nature, could remain undetected.
- Systemic risks to customer service dynamics: The potential to alter the dynamics of the interactions between human actors and machines in the financial system, creating new sources of systemic risk.
- Added layers of regulation: The introduction of fiduciary requirements to always act in the best interests of the customer amid questions regarding whether AI systems can be held responsible for their actions.
- Algorithmic collusion: Autonomous, unintended collusion between AI systems without any instruction from their human creators and without any explicit, trackable communication.
According to the World Economic Forum, such risks could be addressed through the introduction of new, bespoke tools and governance frameworks.
“Using AI in financial services will require an openness to a fundamentally new way of safeguarding the ecosystem, different from the tools of the past,” Rob Galaski, partner, Deloitte Canada’s global banking & capital markets consulting leader, said.
“To accelerate the pace of AI adoption in the industry, institutions need to take the lead in developing and proposing new frameworks that address new challenges, working with regulators along the way.”
Matthew Blake, the World Economic Forum’s head of financial services, noted the benefits of AI technology in the financial services industry, stating that it provides firms with a “competitive edge”.
“AI offers financial services providers the opportunity to build on the trust their customers place in them to enhance access, improve customer outcomes, and bolster market efficiency,” he said.
“This can offer competitive advantages to individual financial firms while also improving the broader financial system if implemented appropriately.”
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