Opportunities and risks of artificial intelligence in the banking sector

Abstract

Banks are evolving in a complex and highly regulated environment which is facing regular challenges and disruption. In order to innovate and to adapt to such an environment, banks must implement new technologies within their organisation. One specific technology is currently impacting importantly the banking sector: Artificial Intelligence. This report aims to analyse the actual impact of AI in the banking institutions by analysing the opportunities but also the risked emerging from the implementation of artificial intelligence. The methedology used to build this thesis has been divided into the main following steps: Literature review, online survey and interviews with experts in the artificial intelligence field. Even if artificial intelligence is still at an early stage of development, AI is already offering interesting opportunities for banks by enabling an enhancement of their operational processes and of their business value. Opportunities such as productivity, cost savings, improved customers experience and services, better risk management,.. can be seized thanks to artificial intelligence. Naturally, opportunities go along with risks. The risk is one of the centrepieces of the banking environment and banks must ensure their risk mitigation function. Many risks are involved with the use of artificial intelligence and banks must be highly vigilant about it. Cybersecurity risk, model risk, data privacy risk and others must more than ever be monitored. Artificial intelligence is also impacting the internal organisation of banks. Indeed, some tasks performed by humans are replaced. A high flexibility will be required from the human workers in order to be assigned to other tasks. New skills and jobs profile are emerging while others become less important and could disappear in the future. The skills and job landscape has already changed and will even more evolve in the future. Artificial intelligence will allow banks to arm themselves against the increasing competition but also to innovate and to offer better quality services to their customers who are becoming increasingly demanding with banks. Also, banks will have to ensure that trust, which is the bank’s cornerstone, is maintained and balances between the risks and opportunities offered by Artificial intelligence.