Sponsored Content
Wealth
By Julia Warrander and Russell Waite, of Affinity Private Wealth
WORKING for a business in the financial services industry, it is difficult to prepare this short article without reviewing the topic du jour; namely artificial intelligence, or AI (and, no, we did not ask ChatGPT to write this).
While there is no single, universally accepted definition, AI generally refers to the ability of machines to exhibit human-like intelligence and a degree of autonomous learning. An example would be machines solving a problem without the use of hard-coded software containing detailed instructions.
Put another way, AI involves a suite of technologies, which – when used correctly – can speed up our information gathering, improve our pattern recognition, enhance our decision making and possibly even enable us to anticipate future events. AI is likely to have a profound impact on all our lives and the businesses in which many of us work.
Research undertaken by the World Economic Forum, in conjunction with Deloitte, predicts it will have a transformative effect on the global financial system – the task of the ecosystem will be to maximise benefits while mitigating harms. In terms of the former, AI presents opportunities for financial institutions across the breadth of their value chains from meaningful improvements to business-as-usual processes, through to the launch of radical, industry-changing products and services.
Shifting to the more nuanced subject of ‘mitigating harms’, two issues are most referenced as areas of concern. The first centres on ethics. The mysterious nature of AI technology may seem like ‘magic’ to the majority of end-users, but understanding its behaviour is vital to understanding – and preventing – models that might discriminate, exclude, marginalise, or even manipulate groups and individuals.
The second relates to risk. As AI becomes increasingly integrated into the day-to-day operations of the financial system, a new source of ‘systemic’ risk is created which has the potential to disrupt governments and economies, necessitating the introduction of a robust regulatory environment. The EU’s AI Act – announced this month – is a case in point, being the first comprehensive set of regulations aimed at providing some ‘guard rails’ around the industry.
When you distil this, it is understandable that some view AI as being ‘smart, but scary’. However, we believe the successful businesses in our world will need to embrace AI for what it is – scary smart.
