Artificial intelligence could “transform” financial services with better customer outcomes and quicker fraud detection, but it does not come without risks, the FCA has said.
Speaking at an event last week, Jessica Rusu, chief data, information and intelligence officer at the regulator, addressed whether the industry would be adopting AI.
She said the technology could help close the “advice gap”.
“On one side of the coin, we have the shiny prospects of AI-powered innovation, promising greater operational efficiencies and accessibility in financial services, increasing revenues and driving innovation,” said Rusu.
“On the other side of the coin, we have a whole host of potential risks. We are at a key moment now - we have options around deciding where to take AI.”
Rusu told the The AI Regulation Summit on October 5 firms and consumers could be at risk of AI scams.
We know AI has the potential to transform financial services.
However, she also said it could tackle the advice gap “with better, more accurate information delivered to everyday investors”.
Examples of this could be by firms using ‘Large Language Models (LLMs)’ which can recognise, translate, predict, or generate text or other content from huge amounts of text.
Rusu said: “Large Language Models (LLMs) in particular could help improve customer service or offer opportunities for those consumers currently excluded from the insurance market by creating more tailored offerings.”
Rusu said AI could help firms offer better products and improve efficiency. She also said firms would have to consider the question of ethical data use when using AI and consider what data to process.
She went on to say that AI-based models can help the FCA tackle fraud and identify bad actors.
The regulator’s Advanced Analytics unit already uses AI and has developed web-scraping and social media monitoring tools that are able to detect, review and triage potential scam websites, which it can then monitor.
Rusu concluded: “We know AI has the potential to transform financial services. It offers benefits ranging from enhanced customer experiences and better consumer outcomes, faster fraud detection, and a financial landscape that adapts and evolves faster than ever before.
“But we know that this must be balanced against the potential risks also, with responsible adoption being paramount, and the need for firms to adhere to the existing regulations in order for beneficial innovations to materialise.
“It falls on all of us, as innovators, leaders and regulators of our financial systems, to ensure that we act as stewards to shape the role of AI in the financial services industry.”
tara.o'connor@ft.com
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