CHICAGO – Executives in the financial services sector are acknowledging both the vast opportunities and significant challenges posed by the proliferation of artificial intelligence-based systems. While AI holds promise for enhancing operations, particularly in explaining complex decisions like portfolio allocations or loan approvals to clients, it also introduces new risks, industry leaders emphasized.
Speaking at an investor conference hosted by Morningstar this week in Chicago, Zack Kass, former head of business partnerships at OpenAI, highlighted AI’s potential to surpass human capabilities in transparency and decision-making. “AI should make that a ton better. The problem is, if we’re not careful, it will just make it worse,” Kass cautioned.
According to several investors and technology experts at the conference, AI is expected to streamline routine tasks such as compliance form filling and portfolio management, freeing up financial professionals to focus more on client interactions and strategic decision-making.
Karen Zaya, a senior research analyst at Morningstar specializing in investment managers’ technology adoption, noted the evolving role of AI-powered chatbots in simplifying customer interactions. However, she underscored the complexity AI faces in managing more intricate financial decisions, like retirement planning.
“I don’t think that’s on the agenda for the industry right now,” Zaya commented. “Firms are proceeding cautiously, ensuring thoughtful implementation to maintain high standards.”
In the regulatory realm, U.S. authorities are soliciting public feedback on AI’s integration in finance, aiming to ensure fair and inclusive access to financial services. Treasury Secretary Janet Yellen recently highlighted AI’s potential to reduce transaction costs while cautioning about its attendant risks.
Margaret Vitrano, portfolio manager at ClearBridge Investments, emphasized that while AI might streamline certain tasks, human expertise remains essential, especially in addressing complex user needs and ensuring optimal user experience in software development.
Brenda Ingram, a financial adviser based in Chicago, expressed optimism about AI’s potential to streamline mundane tasks like compliance reporting, potentially saving time and costs for firms.
As the financial industry navigates AI’s integration, executives and regulators alike are grappling with balancing innovation with risk mitigation, aiming to harness AI’s capabilities responsibly while ensuring robust human oversight and ethical practices.
