The Parliamentary Treasury Committee is reaching out to consumers, finance companies, and IT suppliers for input as they investigate the role of artificial intelligence in finance. AI has become a staple in the industry, powering everything from chatbots that assist customers to advanced algorithms for trading. A recent report from the Bank of England shows that about 75% of finance firms already use AI, with another 10% ready to jump in within the next few years.
But while finance companies are eager to embrace AI for its cost-saving potential, a senior IT professional warns that left unchecked, banks might push this technology too far. They see automation as a means to cut costs, overlooking the potential fallout when things go wrong.
The inquiry looks beyond just banks and includes sectors like insurance and pensions. The aim is to strike a balance; AI’s benefits come with significant risks, especially in finance. The committee wants to examine how AI is being utilized, its innovative potential, effects on jobs, and whether it could threaten financial stability or increase cybersecurity risks.
MP Meg Hillier, who chairs the committee, emphasizes that governments are keen to support AI growth. She recognizes the need to explore the future landscape of financial services as AI adoption accelerates. While she sees the promise in AI for keeping the finance sector competitive, she also cautions that we must ensure proper safeguards to protect customers.
The committee’s call for evidence runs until March 17. They’re asking critical questions about how the government and financial regulators can balance the benefits of AI while protecting consumers and maintaining financial stability.
However, a significant consequence of ramping up AI use is job losses as automation takes over many roles. A Bloomberg Intelligence report forecasts that AI could eliminate around 200,000 middle and back-office jobs in the UK. As banks integrate more AI technology, they risk creating a financial system that relies heavily on machines, increasing the chances of another crisis as automated systems expedite trading.
The financial services regulator is collaborating with stakeholders to ensure the responsible rollout of AI. Speaking at an international financial conference in Hong Kong, Sarah Breeden from the Bank of England stressed that regulatory measures need to be proactive as AI gains traction. She introduced plans for a consortium that includes finance organizations and AI experts, aiming to harness the technology’s advantages while managing its risks.