Artificial intelligence is a subject that is attracting plenty of interest not only in financial services, but across all industries at the moment.
It can be a divisive topic, but what is beyond debate is the fact that AI is playing an increasingly significant role in how businesses operate and services are delivered, particularly in the banking sector.
Take the recent announcement from payments firm Ingenico, for instance. The French company has deployed AI technology to develop a real-time fraud detection solution designed to help merchants boost revenue by optimizing their acceptance rate.
This is one of many examples of private businesses buying into AI in the hope of cutting costs or driving efficiency, but should we also be asking if the industry is showing enough caution in this area?
The Financial Stability Board (FSB), a global body that monitors the financial system and makes recommendations based on its findings, recently issued a statement on the growth of AI and machine learning in the industry.
It acknowledged that there are many potential benefits to be gained from these technologies, such as more efficient processing of information for tasks including credit decisions and customer interactions.
Regulators and supervisors could apply AI and machine learning to drive up compliance standards and increase their effectiveness, the FSB noted.
However, the body also stressed some of the potential disadvantages of these innovations, such as the “lack of interpretability or auditability of AI and machine learning methods”, which “could become a macro-level risk”.
“As with any new product or service, it will be important to assess uses of AI and machine learning in view of their risks, including adherence to relevant protocols on data privacy, conduct risks and cybersecurity,” the FSB advised.
“Adequate testing and ‘training’ of tools with unbiased data and feedback mechanisms is important to ensure applications do what they are intended to do.”
It looks set to become increasingly important that financial services providers – from the biggest banks to the smallest fintechs – are paying heed to these issues as AI becomes an increasingly common component of the industry.
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