Senior executives across financial services expect mass adoption of artificial intelligence (AI) to amplify systemic, market-wide risks, according to a recent survey.
Transforming Paradigms: Global AI in Financial Services Survey, released by the World Economic Forum and the Cambridge Centre for Alternative Finance, is based on interviews with 151 financial firms and investigated the perceived impact of AI implementation on a range of risks.
Firms cite the risk of increased privacy breaches (at over 55% of respondents), systemic, market-wide risks (at 50%) and cyber-attacks (at nearly 50%) as key concerns with the mass adoption of AI.
Internally customer-generated data is in ‘very high’ use by 40% of financial services firms for AI applications, which may explain why there are big concerns over risks of privacy breaches.
Around 32% of firms think AI adoption would reduce the risk of mass cyber-attacks, which is further evidenced by the Global Compliance Survey released by Nasdaq last year. According to that survey, compliance officers are looking to reduce the number of false positives through the use of AI.
Despite financial service firms expecting mass AI adoption to increase the risk at market level significantly, they do not see much evidence of that risk happening currently.
Only 8% of respondents think today’s levels of AI implementation is significantly increasing the risk of privacy breaches, while even fewer believe there is a significant increase in risk from current AI implementation on cyber-attacks.
Among US financial services firms surveyed, 61% believe that AI will either slightly or significantly increase the risk of market-wide risks, and 44% of UK financial services firms say the same.
A sizable majority, 68%, of financial service executives believe they are well placed to deal with the perceived risks of mass AI adoption.
The most confident firms are those subject to prescriptive regulations with data security and cyber-security. But many firms do not involve risk specialists when looking at AI implementation, which explains why there are still concerns about its future influence.