Treasury Secretary Janet Yellen has emphasized the potential risks and rewards associated with the use of artificial intelligence (AI) in the financial services sector. While acknowledging the benefits of AI in portfolio management, fraud prevention, customer service, and cost reduction, Yellen also highlighted concerns such as faulty data, concentration of vendors, inadequate risk management practices, and the complexity of AI models.
To address these issues, the Treasury is launching a public request for information to gather input from various stakeholders, including financial institutions, consumers, advocates, and academics. Yellen emphasized the need for scenario analysis to identify potential vulnerabilities and enhance resilience in the face of rapidly evolving AI technology.
Gary Gensler, the chair of the Securities and Exchange Commission (SEC), has also expressed concerns about the potential risks of AI in the financial sector. He warned against overhyping and misleading the technology, urging financial markets to avoid an “AI-wash” mentality. Gensler further stated that a financial crisis triggered by AI is almost inevitable within the next decade, with a single data aggregator or model potentially being the source of the crisis.
The International Monetary Fund’s deputy managing director, Gita Gopinath, added that AI could exacerbate the next economic downturn by threatening a wider range of jobs, including higher-skilled cognitive roles. This could have a significant impact on both advanced economies and emerging markets, potentially causing a major shock to the financial system.
A survey conducted among business leaders revealed that 65% believe the success of AI depends on public adoption, with 60% pushing for faster adoption. However, finding the right talent to scale AI remains a challenge, with 53% of respondents struggling to fill generative AI roles.
The financial services sector is experiencing a rapid shift in workforce needs, prompting CEOs to prioritize upskilling programs as part of their enterprise strategies for scaling generative AI, according to Shanker Ramamurthy, a Global Managing Partner at IBM Consulting.