The financial sector is among the “most exposed” to both the benefits and the risks of artificial intelligence (AI), the Bank for International Settlements (BIS) said Tuesday (June 24).
The benefits of AI for the sector include improvements for lending and payments, while the risks include more sophisticated cyberattacks, the BIS said in a Monday press release.
To prepare for the impact the technology may have on the sector, central banks should embrace AI, anticipate its impact on the economy and the financial system, and use it in their own operations, according to the release.
Central banks should also cooperate with each other, as the AI revolution has increased the importance of data, per the release.
New generation AI models “have a direct bearing on how central banks do their jobs,” Hyun Song Shin, head of research and economic adviser at BIS, said in the release.
“Vast amounts of data could provide us with faster and richer information to detect patterns and latent risks in the economy and financial system,” Shin said. “All this could help central banks predict and steer the economy better.”
Central banks could deploy AI to use data to better predict inflation and other economic variables, to identify vulnerabilities in the financial system and to better manage risks, according to the release.
In the financial sector, the technology could improve efficiencies and lower costs for a variety of financial services, per the release.
The BIS’ own portfolio currently includes projects that use AI, Cecilia Skingsley, head of the BIS Innovation Hub, said in the release. She pointed to Project Aurora, which uses payments data to detect money laundering, and Project Raven, which uses AI to enhance cyber resilience.
“Central banks were early adopters of machine learning and are therefore well positioned to make the most of AI’s ability to impose structure on vast troves of unstructured data,” Skingsley said.
It was reported on June 7 that the growing dependence of banks on Big Tech companies for AI capabilities is seen as one of the biggest risks for banks.
In May, the U.S. Treasury Department said the growing use of AI within the financial services sector poses cybersecurity risks.
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