When artificial intelligence (AI) emerged as a viable option for use in financial services, experts hailed its transformative potential while also warning of the risks it could pose to markets, institutions and consumers. Since then, AI has permeated much of the financial industry and significantly changed some aspects of how its businesses operate. Not as radical transformation of the industry, however, but as a steady trickle of new technologies and applications across the sector. Considerable risks also remain, as does uncertainty about regulatory approaches to AI.
We spoke with four experts to explore how AI use is likely to evolve in the financial industry in the years to come: AI in Financial Services – The Road Ahead
They are optimistic that banks, insurers, and other institutions will find new ways of deriving value from it, including in back-end operations. At the same time, they have concerns about weak governance of AI, as well as the implications that incumbents’ control of data will have on competition. Familiarity with the technology may now be widespread, but much remains unclear about its ultimate impact on the industry.
Unsurprisingly for an emerging technology field, AI use has not met all the expectations that financial industry experts initially had for it. In investment management, for example, share trading has benefited less from AI than some early predictions.
Data challenges—revolving around quality and availability—and scarcity of specialist talent are likely to remain constraints on AI value-generation in the financial as in other industries.
Thus far, financial regulators have largely refrained from intervening directly in institutions’ use of AI. Data privacy rules have been the main point of reference, as well as the normal systems and controls around technology risk that licensed financial institutions are expected to have in place.