The rapid use of artificial intelligence in banking could trigger financial stability risks and some unexpected surprises unless proper testing and training is put in place, the Financial Stability Board has warned.
Banks, insurers and asset managers are rushing to swap humans with computer systems able to do the same jobs, with ‘smart’ robots able to crunch data, automate client interaction, spot fraud or price insurance contracts.
But the race to replace people with machines “has the potential to amplify financial shocks” and could be used by cybercriminals to manipulate market prices, the FSB said, adding that firms were in an ‘arms race’ to adopt AI because their competitors are.
While the FSB acknowledged that the use of AI shows “substantial promise” and could make the financial system more efficient, it urged the industry to monitor usage closely as a number of risks were on the horizon.
Institutions could become dependent on the technology giants making the robots, for example, opening them up to risks created by third-party providers which fall outside the remit of financial regulators.