Bank of America (BoA) says that integrating artificial intelligence (AI) into existing banking processes is expected to bring a variety of benefits to the financial services industry.
BoA highlighted that automation is the most obvious application of machine learning (ML) tools in finance, adding that productivity and efficiency bring further benefits. report. But analysts at the bank, led by Richard Thomas, cautioned that despite the positive aspects of using AI, entities in this space need to proceed with caution.
“Increased automation is likely to be the first and largest application of AI technology for banks, and has the potential to improve bank productivity and thereby improve bank profits, but AI in banks “The widespread use of has also shown some vulnerabilities,” the report states.
In its report, BoA said banks and other financial institutions need to proceed with AI implementation with caution. The report drew attention to the privacy and cybersecurity risks associated with integration with AI tools, warning that customer information could be within the reach of malicious actors.
The bank cited the democratization of AI and “lower barriers to threat actors” as key areas of concern for banks to address in their efforts to integrate AI.
Recognizing the threat of AI to finance, several US-based banks have banned employees from using generative AI tools in the workplace due to concerns about potential data breaches.
Many banks are already incorporating AI into their services to spot financial anomalies, assess credit risk, and predict customer behavior. Some financial institutions are
Google (Nasdaq: Google) is an AI-powered anti-money laundering (AML) tool, but other tools include Mastercard’s (Nasdaq: Massachusetts) proposes a crackdown on financial crimes.
Despite early implementation efforts, BoA analysts say that the prospects for significant revenue growth from AI are “less concrete” but that banks will see a financial windfall in 10 years. The company says it has the potential to significantly contribute to profits.
While banks are urged to proceed cautiously with AI implementation, the BoA report calls on regulators to ensure that appropriate guardrails protect the financial industry from AI’s existential risks.
Southeast Asia grabs the bull by the horns
While US-based banks are hesitant to adopt AI, banking regulators in Southeast Asia are encouraging commercial banks in the region to adopt AI technology to improve service delivery. The Reserve Bank of India (RBI), through Deputy Governor Mahesh Kumar Jain, has called on financial institutions in the country to leverage AI to reduce systemic risks in banks.
Meanwhile, the Monetary Authority of Singapore (MAS) is calling for a cautious approach to AI adoption after being hurt by the failure of its digital currency foray.
“We want to play the long game in this space,” said one MAS executive on AI. “We want to ensure that whatever AI we deploy or promote will be here for the long term. We have learned many lessons across the DLT/digital currency space. If you are in a great hurry, you may see the bad guy coming quickly.”
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