MPs to examine use of artificial intelligence by the finance sector (19459000)
MPs Launch Inquiry into the Use of Artificial Intelligence Technologies in the Financial Services Sector
Karl Flinders.
A Parliamentary Treasury Committee inquiry into the use artificial intelligence (AI), technology in the financial sector has been launched. Consumers, finance firms, and IT suppliers have been asked to provide evidence.
AI technology is widely used in the finance industry, where automation is rampant. This includes chatbots that support customers and even AI used to make trading decisions.
The money, IT skills, and business case are all there for banks and other finance companies to increase their use of AI. Bank of England data revealed that 75% of financial firms already use AI and another 10% plan to do so in the next three year.
But if left to their own devices banks will push technology to the breaking point. According to a senior IT professional from the UK finance industry, “With AI, they’ve got their teeth in it and they’re thinking ‘We can save a lot of money with branches or head offices, or staff until it’s wrong’.”
Widespread adoption
Treasury Committee inquiry extends beyond banks to include the wider financial sector, such as insurance and retirement. AI is supported by the government, but its use in finance comes with great risks.
A committee of MPs could examine how AI is used by finance firms, what opportunities it offers for innovation, the impact on employment, and how AI could “jeopardize financial stability”. It could also ask if there are any increased cyber security threats.
Meg Hillier is the Labour (Co-op), MP for Hackney South & Shoreditch who chairs the committee. She said that the governments have made it clear that they want to support the increased usage of AI in the economic.
She said, “My committee wants an understanding of what this will look like in the financial services sector as well as how [finance sector] may change over the next few years when the transformation gains momentum.”
She said that it was important for the [finance sector] to capitalise on AI innovations and continue to be a global leader in finance, but warned about the risks associated with the unfettered use AI. “We must also ensure that there are adequate safeguards to mitigate the risks, especially for customers.”
The cost to humans of increased AI adoption is huge job losses as a growing number of human roles become automated. This results in job loss and less human interaction for consumers when they do their everyday banking.
According to a recent Bloomberg Intelligence study, 200,000 middle- and back-office positions will be lost due to AI. Meanwhile, UK banks are expanding the use of technology like AI to replace employees and branches in the high street.
Automation can also increase the risk of another financial crash, as automated trading systems accelerate.
Financial services regulators are working with stakeholders to ensure that AI adoption is done in a way which benefits the industry but minimizes risks.
Sarah Breeden, deputy governor of the Bank of England’s financial stability division, said at an international financial conference in Hong Kongthat regulation must keep pace with AI adoption. To achieve this, the regulator is planning a consortium in which private sector finance organisations can share their knowledge about the technology with AI experts.
Benefits to the sectoras well as managing risk.
Karl Flinders.
By Karl Flinders.
Karl Flinders.
Lord Chris Holmes. Karl Flinders.
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