This semi-monthly column by Sabrina I. Pacifici highlights news, government reports, industry white papers, academic papers and speeches 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.
GOVERNMENT DOCUMENTS:
GSA. It Modernization Centers for Excellence. AI Guide for Government, A Living and Evolving Guide to the Application of Artificial Intelligence for the U.S. Federal Government, November 16, 2023. This AI Guide for Government is intended to help government decision makers clearly see what AI means for their agencies and how to invest and build AI capabilities. See https://coe.gsa.gov/coe/ai-guide-for-government/introduction/index.html for future updates.
FACT SHEET, November 1, 2023: Vice President Harris Announces New U.S. Initiatives to Advance the Safe and Responsible Use of Artificial Intelligence. As part of her visit to the United Kingdom to deliver a major policy speech on Artificial Intelligence (AI) and attend the Global Summit on AI Safety, Vice President Kamala Harris is announcing a series of new U.S. initiatives to advance the safe and responsible use of AI. These bold actions demonstrate U.S. leadership on AI and build upon the historic Executive Order signed by President Biden on October 30.
NEWS:
FinTech Magazine, November 15, 2023. Evident Index report: Which banks are winning the AI race? – In its annual report, the Evident AI Index reveals which banks are leading in AI adoption and best usage. Read on to see the current AI banking leaders… Created by Evident – the AI benchmarking and intelligence platform – the Evident AI Index is a leading independent benchmark for commercial AI adoption and performance in the financial services sector. First launched in January 2023, the Index ranks the effectiveness with which commercial financial services and banks are developing, adopting, and/or implementing AI across their organisation. Assessing the AI maturity of 50 of the world’s largest banks by combining extensive manual research, automated data capture from public sources, consultation across a network of AI experts, and ongoing dialogue with the featured banks, Evident has listed the banks winning the AI race today.
Forbes, November 12, 2023. No, ChatGPT And Generative AI Won’t Destroy Humanity (But They Could Severely Damage Your Business)…Here are three ways that Generative AI can damage slow movers…
Retail Banking International, August 31, 2023. Just 1-in-5 UK consumers satisfied with support from their bank: SAP. Over 1-3 customers aged over 55 say they’re open to switching banks based on interest rates and sign up offers compared with just 16% of Gen Z says SAP.
AI Snake Oil, October 31, 2023. What the executive order means for openness in AI. Good news on paper, but the devil is in the details
Futurism, An AI Completed 360,000 Hours of Finance Work in Just Seconds. Pack it up, folks. The machines will take it from here.
The New York Times, November 11, 2023. Personalized A.I. Agents Are Here. Is the World Ready for Them? The age of autonomous A.I. assistants could have huge implications.
Forbes, October 30, 2023. When The Bank’s Customers Are Replaced By Custobots – I was interested to see that Gartner’s IT top ten strategic technology trends for 2024 include the arrival of machine customers (what they call ‘custobots’ but what I call “economic avatars”, a precise and descriptive label that the virtual reality visionary Jaron Lanier introduced some years ago). These are the smart, non-human actors that can autonomously negotiate and purchase goods and services in exchange for payment. Gartner think that in five years there will be 15 billion connected products with the potential to behave as customers, with billions more to follow in the coming year.
PAPERS – Artificial Intelligence, Machine Learning, Algorithms
NBER. The A.I. Dilemma: Growth versus Existential Risk, Charles I. Jones, Working Paper 31837. DOI 10.3386/w31837. Issue Date November 2023. Advances in artificial intelligence (A.I.) are a double-edged sword. On the one hand, they may increase economic growth as A.I. augments our ability to innovate. On the other hand, many experts worry that these advances entail existential risk: creating a superintelligence misaligned with human values could lead to catastrophic outcomes, even possibly human extinction. This paper considers the optimal use of A.I. technology in the presence of these opportunities and risks. Under what conditions should we continue the rapid progress of A.I. and under what conditions should we stop?
BIS, Basel Committee on Banking Supervision Discussion paper. Digital fraud and banking: supervisory and financial stability implications. Issued for comment by 16 February 2024. November 2023.
Firm-Level Climate Change Exposure, Zacharias Sautner, Laurence Van Lent, Grigory Vilkov, Ruishen Zhang, First published: 28 February 2023. https://doi.org/10.1111/jofi.13219
NBER. Schmidt Futures: AI and Mechanism Design. Hal Varian. November 2, 2023.This is a preliminary draft and may not have been subjected to the formal review process of the NBER. This page will be updated as the chapter is revised.
Federal Reserve Board – March 2023. Identifying Financial Crises Using Machine Learning on Textual Data Mary Chen, Matthew DeHaven, Isabel Kitschelt, Seung Jung Lee, and Martin J. Sicilia. We use machine learning techniques on textual data to identify financial crises. The onset of a crisis and its duration have implications for real economic activity, and as such can be valuable inputs into macroprudential, monetary, and fiscal policy. The academic literature and the policy realm rely mostly on expert judgment to determine crises, often with a lag. Consequently, crisis durations and the buildup phases of vulnerabilities are usually determined only with the benefit of hindsight. Although we can identify and forecast a portion of crises worldwide to various degrees with traditional econometric techniques and using readily available market data, we find that textual data helps in reducing false positives and false negatives in out-of-sample testing of such models, especially when the crises are considered more severe. Building a framework that is consistent across countries and in real time can benefit policymakers around the world, especially when international coordination is required across different government policies. DOI: https://doi.org/10.17016/IFDP.2023.1374
SPEECHES:
BIS, Lisa D Cook: Welcoming remarks – 5th Annual Conference on “Nontraditional Data, Machine Learning, and Natural Language Processing in Macroeconomics“. Welcoming remarks by Ms Lisa D Cook, Member of the Board of Governors of the Federal Reserve System, at the 5th Annual Conference on “Nontraditional Data, Machine Learning, and Natural Language Processing in Macroeconomics”, Washington DC, 13 November 2023.
BIS, Lawrence Wong: Transition, technology and talent to accelerate the value of insurance. Keynote address by Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance, and Deputy Chairman of the Monetary Authority of Singapore, at the 2023 Global Insurance Forum, Singapore, 7 November 2023.
Competitiveness and growth: continuing the conversation − speech by Victoria Saporta. Given at the conference on the role of financial regulation in international competitiveness and economic growth held at Bank of England Published on 19 September 2023. Vicky Saporta talks about how the PRA can advance its new competitiveness and growth objective.