This semi-monthly column by Sabrina I. Pacifici highlights news, government and regulatory documents and industry white papers as well as academic papers on the subject of AI’s fast paced impact on the banking and finance sectors. The chronological links provided are to the primary sources, and as available, indicate links to alternate free versions. Each entry includes the publication name, date published, article title and abstract.
Inferse, July 15, 2023 – OECD: 60% of finance and manufacturing workers fear AI replacement: While AI’s impact on the labour market has been limited so far, concerns about job security are heightened, the Organisation for Economic Co-operation and Development (OECD) has found. To assess the emerging opinions around artificial intelligence in the workplace, the OECD surveyed over 2,000 employers and 5,300 workers in finance and manufacturing across seven of its member countries. The survey showed that three in five employees working in these sectors fear they’ll be replaced by AI in the next decade. Two in five are worried about AI-related wage decreases.
Every, July 13, 2022 – OpenAI’s Code Interpreter Is About to Remake Finance: AI has been used by accountants for a long time; it just depends on what techniques you give the moniker of artificial intelligence. The big accounting firms will sometimes use machine learning models to classify risk. However, because large language models (LLMs) like GPT-4 and Claude are still relatively new, these techniques haven’t been widely integrated into auditors’ or accountants’ workflows. When I say, “I want to replace my accountant with a Terminator robot,” I’m looking for a way to use LLMs to automate work that an accountant would typically do.
MIT News, July 13, 20223. How an “AI-tocracy” emerges. In China, the use of AI-driven facial recognition helps the regime repress dissent while enhancing the technology, researchers report.
Financial Times, July 12, 2023 [free link] – OECD says rich economies on cusp of AI ‘revolution’: The OECD has said mass adoption of generative AI in the workplace will trigger a wave of job losses and ethical issues, as it warned the world’s richest economies to prepare for upheaval in their labour markets. The rapid development in generative AI, which is able to perform complex written work at an increasingly low cost, combined with the ease of adopting these new technologies “suggest that OECD economies may be on the cusp of an AI revolution which could fundamentally change the workplace,” the Paris-based organisation said on Tuesday.
Quartz, July 12, 2023. The economic case for slowing down AI. Economists built a mathematical model for avoiding a machine learning disaster.
Fortune, July 8, 2023 – Wharton professor says ‘things that took me weeks to master in my PhD’ take ‘seconds’ with new ChatGPT tool: Code Interpreter for ChatGPT democratizes data analysis, says Wharton’s Ethan Mollick, and might be the most useful A.I. application so far.
ZDNet, July 7, 2023 AI, trust, and data security are key issues for finance firms and their customers: Financial services customers are switching providers for a better digital experience. In the past year alone, 25% of customers switched banks. Here’s why.
Fortune, July 8, 2023 [free link via Yahoo News] – Wharton professor says ‘things that took me weeks to master in my PhD’ take ‘seconds’ with new ChatGPT tool: Code Interpreter for ChatGPT democratizes data analysis, says Wharton’s Ethan Mollick, and might be the most useful A.I. application so far.
Forbes, July 6, 2023 – Responsible AI: A Mandate In Finance And Insurance: “AI is rapidly becoming an essential technology for companies in every industry, and the finance and insurance industries are no different. AI is already being used to help such businesses stand out from competitors. Fintech companies are using it to automate back-office processing and improve customer service. Traditional financial services companies are using it in trading and to optimize back- and front-office operations. Insurance companies use AI for everything from underwriting and pricing to claims processing and measuring the detailed behaviors of individuals. As all of these trends accelerate, the companies that can effectively adopt AI will likely leave behind the companies that can’t.”
Bloomberg, July 5, 2023 – Nine British Banks Sign Up to New AI Tool for Tackling Scam: Mastercard Inc. is selling a new artificial intelligence-powered tool that helps banks more effectively spot if their customers are trying to send money to fraudsters. Nine of the UK’s biggest banks, including Lloyds Banking Group Plc, Natwest Group Plc and Bank of Scotland Plc, have signed up to use the Consumer Fraud Risk system, Mastercard told Bloomberg News. Trained on years of transaction data, the tool helps to predict whether someone is trying to transfer funds to an account affiliated with “authorized push payment scams.” This type of fraud involves tricking a victim into moving money into an account falsely posing as a legitimate payee, such as a family member, friend or a business. The tool comes as UK banks prepare for new rules from the Payment Systems Regulator that will require them to compensate customers affected by APP scams from 2024. Historically banks haven’t been liable for this type of fraud, although some signed a voluntary agreement to pay back victims.
Forbes, July 3, 2023 – Finance Professionals May Find A Research Assistant In AI: “A large part of my job as chief investment officer to an SEC registered investment adviser revolves around data. Collecting it, managing it, parsing it, and deducing things from it. There are so many economic and other capital markets relevant data available that access to data and information has become fully commoditized. Google has been many a researcher’s best friend. Its latest AI offering, Bard, played a role in the writing of this article. It was my research assistant, demonstrating once again that having access to information is not nearly as important as knowing what questions to ask about it.”
Bloomberg, May 31, 2023 [free link]. Wall Street Banks Are Using AI to Rewire the World of Finance: Lenders are experimenting with artificial intelligence. Not even Warren Buffett is sure what happens next.
Regulating Transformative Technologies. Daron Acemoglu, Todd Lensman, MIT. July 6, 2023. Transformative technologies like generative artificial intelligence promise to accelerate productivity growth across many sectors, but they also present new risks from potential misuse. We develop a multi-sector technology adoption model to study the optimal regulation of transformative technologies when society can learn about these risks over time. Socially optimal adoption is gradual and convex. If social damages are proportional to the productivity gains from the new technology, a higher growth rate leads to slower optimal adoption. Equilibrium adoption is inefficient when firms do not internalize all social damages, and sector-independent regulation is helpful but generally not sufficient to restore optimality.
RESOURCES – Government and Private Sector
- IAPP Key Terms for AI Governance Essential terms and explanations for AI governance
- IBM Global AI Adoption Index 2022 – New research commissioned by IBM in partnership with Morning Consul
- Accenture – The art of AI maturity: Advancing from practice to performance
- AI Accountability in the U.S. Federal Government – A Primer – American Council for Technology-Industry Advisory Council (ACT-IAC) – “Artificial Intelligence (AI) has been implemented for hundreds of use cases across the Federal government. Given this increased adoption, Federal leaders have an opportunity to lean in to take responsible and prudent measures to address AI accountability in the context of their unique mission. This paper outlines minimum requirements and related policy guidance and provides recommendations on actions agencies can take to proactively manage risks associated with AI accountability…
- Government of Canada – Responsible use of artificial intelligence (AI)