FINANCIAL FIRMS INVESTING IN AI
Report sees pros and cons to the technology
A steady increase in artificial intelligence at financial services firms could make investment accounts and lending products better and cheaper, but at the expense of discriminatory software and crucial computer systems that are more vulnerable to attackers, according to a new report from the World Economic Forum.
“It allows those financial institutions to deliver a high level of service,” said Jesse McWaters, the report’s lead author. “It also does present some potential challenges because having more connections creates a larger threat surface, more points where cybercriminals could attack the system.”
In the report, which was written with the help of a number of industry insiders, WEF says an impending surge in artificial intelligence uses will significantly impact the companies and their operations.
“The deployment of AI should enable a fairer, more accessible and more stable financial system,” the report says. “Maintaining a human-centric approach to the deployment of AI will be critical to ensuring it serves the interests of both individuals and society at large.”
AI products also raise questions of ethics, McWaters said, particularly whether a customer is being offered products and suggestions that are in their best interests or simply in the financial interests of the company. There are strict rules for personal advisers, but not for software.
“You don’t want a retired grandmother to be put in highrisk oil stocks,” he said.
Regardless of industry, AI is only as good as the information it has to work with. If that data is flawed or biased, the software will reflect that. If software determines a group of customers would be higher-risk clients for the company, it may begin to reject any customer that is similar, without regard for their personal attributes.
“You might have an AI learn that a series of characteristics that are predictors of being a protected class are associated with a higher default rate and make a set of decisions that are functionally discriminatory,” McWaters said.
Still, the benefits of AI are significant. AI allows companies to offer more products and options and automate arduous and repetitive tasks. Some companies have begun picking stocks using algorithms and artificial intelligence, while others are focusing on improving their own internal systems.
One of the biggest proponents of artificial intelligence has been Fidelity Investments, which has used the technology to improve its call centers. The company has also used automated technology to help new customers with their investment goals.