The Parliamentary Treasury Committee has called on consumers, finance firms and IT suppliers to provide evidence to support an inquiry into the use of artificial intelligence (AI) technology in the finance sector.
AI is used widely in the finance sector where automation is rife. This includes chatbots supporting customers and even the use of AI in making trading decisions.
Banks and other finance firms have the money, IT skills and business case to increase the use of AI. In fact, the Bank of England figures recently revealed that 75% of finance firms are already using AI, with a further 10% planning to use it over the next three years.
But left to their own devices, banks will push the technology to breaking point, according to one senior IT professional in the UK finance sector, who said: “With AI, they have got their teeth into it, and they’re thinking, ‘We can automate loads of stuff and save a load of money with branches, head offices or staff until it goes wrong’.”
Wide adoption
The Treasury Committee inquiry goes beyond banks and includes the wider finance sector such as insurance and pensions. There is a balance that must be reached because AI has government support, but there are great risks associated with its use in the finance sector.
The committee of MPs may explore how AI is currently used by finance firms and what opportunities it brings for innovation, could consider the potential impact on employment in the sector, and could review how AI might “jeopardise financial stability”. It might also question whether there are increased cyber security risks.
MP Meg Hillier, Labour (Co-op) MP for Hackney South and Shoreditch, who chairs the committee, said that governments have been clear that they intend to support the increased use of AI in the economy.
“My committee wants to understand what that will look like for the financial services sector and how the [finance sector] might change in the coming years as that transformation gathers pace,” she said.
“It’s critically important the [finance sector] can capitalise on innovations in AI and continue to be a world leader in finance,” she added, but warned of the risks associated with unfettered use of AI. “We must also be mindful of ensuring there are adequate safeguards in place to mitigate the associated risks, particularly for customers.”
The call for evidence, which is open until March 17, asks: “How can government and financial regulators strike the right balance between seizing the opportunities of AI, but at the same time protecting consumers and mitigating against any threats to financial stability?”
The human cost of increased take-up of AI includes huge job cuts as an increasing range of human roles are automated, resulting in job losses and less human contact for consumers in their everyday banking.
A recent Bloomberg Intelligence report predicts 200,000 middle and back-office jobs will be lost to AI, while UK banks expand the use of technology such as AI to replace people and branches on the high street.
There are also risks that automation can increase the likelihood of another financial crash as automated systems accelerate trading.
The financial services regulator is working with stakeholders to help ensure that AI is taken up in a way that benefits the industry, but negates risks.
During an international financial conference in Hong Kong, deputy governor of financial stability at the Bank of England Sarah Breeden said that regulation must stay ahead of AI take-up. To this end, the regulator plans a consortium where private sector finance organisations and AI experts can provide knowledge on the technology’s benefits to the sector and to manage risk.