PARIS: Governments, financial regulators and businesses should step up their efforts to address the challenges of developing and deploying trustworthy artificial intelligence in the financial sector, the Organisation for Economic Co-operation and Development said.
AI, which is a set of applications including machine learning and robotics, holds “tremendous potential to improve productivity and innovation” in the financial sector, report agencies.
“AI can create new risks or reinforce existing risks,” the report said.
“The myriad uses of AI call for balanced policy approaches that can support AI development and adoption while mitigating risks.”
Some of the risks associated with AI include “entrenching bias, lack of explainability of financial decisions, introducing new forms of cyber attacks and automating jobs ahead of society adjusting to the changes”.
It also raises challenges related to “privacy, autonomy, transparency and accountability”, which are particularly complex in the financial sector, said the report.
It added that complex AI algorithms that are difficult or even impossible to explain could “amplify existing risks in financial markets or give rise to new risks”.
The financial and insurance sector is among the top 10 industries in terms of the amount of venture capital investments in AI start-ups, investing over $4 billion globally last year, OECD data showed. Almost 65 per cent of the VC investments in the sector went to American AI start-ups.
Overall, investors poured money into AI-focused companies at a historic rate during the Covid-19 pandemic, a study by Stanford University showed.
Total global AI investment, including private investment, public offerings, mergers and acquisitions and minority stakes, increased by 40 per cent last year for a total of $67.9bn, compared with a 12 per cent jump from 2018 to 2019.
In the financial sector, AI has the potential to improve customer experiences, identify investment opportunities, grant more credit at better conditions, enable transactions, enhance market efficiency, reinforce financial stability and promote greater financial inclusion.