Disruptive innovations in the modern world are commonplace, and those businesses that can quickly respond and adapt to change survive. The use of artificial intelligence (AI) is undoubtedly one of those changes that transform life beyond recognition.
In recent years, AI has been actively introduced in various fields, and the financial sector is one of the pioneers in this regard. Artificial intelligence dramatically changes the entire process of providing services to customers and makes it possible to increase the efficiency of internal processes and cybersecurity, as well as significantly reduce risks. Many financial market experts see AI as a kind of magic wand, which alone gives you more than double the average annual revenue growth rate (CAGR), while others provide an additional profit center of billions of dollars.
However, in order to correctly understand the influence of AI on the financial sector and the degree of this influence, to which it really portends the fourth industrial revolution, we should consider in more detail what artificial intelligence really is and what it is capable of.
In this article, legal experts from IQ Decision UK will discuss some legal issues that arise for enterprises using the latest high technologies, as well as the regulation of artificial intelligence in the context of the financial sector.
AI in Terms of Law
Given the specific risks that AI poses, the task of lawyers is to understand how the existing legal and regulatory framework can be applied and how regulation can be developed in this area at the international, regional and national levels. The legal regulation of artificial intelligence is a question that remains to be studied.
Artificial Intelligence and UK Financial Market Regulation
The technological arsenal of artificial intelligence is impressive today.
With some simplification, it can be divided into five large groups: machine learning, natural language processing, machine vision algorithms, software agents, or bots, and finally, robotics. Using these technologies, which until recently seemed like science fiction, is effective now. AI makes decisions faster, makes it more accurate and cheaper than humans. Not for nothing that the vast majority of British companies have already allocated budgets for the implementation of solutions based on in-depth analytics.
All modern financial services rely on IT systems, and the failure or misuse of these systems can cause significant harm to society and consumers, and this should not be forgotten for a second. Therefore, the UK has taken rather stringent measures to regulate the provision of financial services.
Technology and Privacy
Many world banks are moving from single cases of using AI to full-fledged implementation programs. The availability of new services using AI, such as assessing the risks of a borrower, recognizing voice or a person to identify fraudsters and many others, allow financial companies to better monitor and predict the behavior of customers and employees. But do not forget about observing the rules for processing personal data.
Innovation and Competitiveness
Antitrust authorities are increasingly turning their attention to digital markets and the impact of innovative technologies on competition. Although the development of “machine learning,” sophisticated algorithms and systems capable of processing huge amounts of data, has led to the emergence of innovative commercial AI applications, there are conflicting opinions about how competition law should relate to these developments.
Postponement of artificial intelligence implementation projects by participants in the banking market may lead some to a significant lag behind competitors, and others to complete disappearance from the market.
Conclusion: Be careful!
The hidden danger of AI is that it is unpredictable, so you can not discount the risk that the system, without taking into account the common sense inherent in humans, will make absolutely wrong decisions.
Governments and regulatory authorities definitely have to do work to solve the problems associated with artificial intelligence, developed and implemented by financial institutions.
If you have any questions regarding the legal regulation of artificial intelligence in the financial sector, we suggest that you discuss these issues in an individual consultation with professionals from IQ Decision UK.
