American Banker, September 14. 2023. Bankers are open to generative AI but list several reservations
Cryptopolitan via MSN, September 14, 2023. The Dual Role of Artificial Intelligence: An Examination of Its Impact on Fraud. Artificial intelligence (AI) has emerged as a powerful force with significant implications across various industries, including healthcare, data science, and finance. While AI’s rapid advancement holds great promise, it also presents challenges concerning fraud. In this article, we explore the multifaceted landscape of AI’s involvement in both facilitating and combating fraudulent activities, analyzing the complexities it entails and potential avenues for resolution.
American Banker, September 12, 2023. SEC’s Gensler warns of AI risk to financial stability
Bloomberg, September 12, 2023. SEC’s Gensler Says Deepfakes Pose Real Risk to Financial Markets. SEC chair says agency will pursue individuals behind AI fraud.
Gensler Testimony – Senate Banking oversight hearing. Artificial Intelligence and Predictive Data Analytics, September 12, 2023. We live in an historic, transformational age regarding predictive data analytics and the use of artificial intelligence. As we further automate pattern recognition and parts of human intelligence itself, this can create great efficiencies across the economy. Today’s predictive data analytics models also provide an increasing ability to make predictions about each of us as individuals. Such analytics and narrowcasting have the potential benefits of greater financial inclusion and enhanced user experience. This also raises the possibilities that conflicts may arise to the extent, for example, that advisers or broker-dealers are optimizing to place their interests ahead of their investors’ interests. If a firm’s optimization function takes the interest of the firm into consideration as well as the interest of the investor, this can lead to conflicts of interest. In July, we put out a proposal to require firms to analyze conflicts of interest that may emerge when using predictive data analytics to interact with investors.28 Firms would need to identify any such conflicts that result in an investor interaction that places the firm’s interests ahead of investors’ interests. Firms then would need to eliminate or neutralize the effects of those conflicts.
The New York Times, September 8, 2023. I.R.S. Deploys Artificial Intelligence to Catch Tax Evasion. The tax agency is opening examinations into large hedge funds, private equity groups, real estate investors and law firms.
FT.com, September 8, 2023. ChatGPT should do your earnings calls [read free] Here is a chart showing the explosion of machine readings of US filings in 2003-16, accounting for 78 per cent of all downloads that final year. Since then it has likely gone parabolic.
FT.com, [read free] September 7, 2023. Forecasting inflation with AI. [read free] We promise we’re not jumping on the bandwagon and turning this site into AI‑phaville, but here’s a legitimately interesting working paper(from the St Louis Federal Reserve on 2023’s hot topic.
American Banker, BankThink, September 7, 2023. Bankers need to understand how much AI can benefit their businesses. There are practical AI-based solutions available right now that not only can, but will almost definitely be utilized to solve major issues that bankers have wrestled with for years. Artificial intelligence has had a major impact on many industries, and banking is no different. Technologies like biometrics, advanced chat and algorithm-driven trading can help solve issues that have plagued bankers for years. “AI will change banking” has become an industry trope in recent years, with experts predicting how future developments might be used. But there are practical AI-based solutions available right now that not only can, but will almost definitely be utilized to solve major issues that bankers have wrestled with for years.
American Banker, September 7, 2023. Banks hear the eerie echoes of AI-generated voices. Fans of Jordan Peele, part of the duo behind Comedy Central’s popular “Key and Peele” series, are likely familiar with his impersonations of former President Barack Obama, including a video Peele made with BuzzFeed in 2018 — the one where Obama appears to use an expletive to describe then-President Donald Trump. The video employs a technology known as a deepfake — doctored media employing artificial intelligence to achieve realism. The technology has gained traction across the internet as a comedic gag. In the world of fraud, it is increasingly helping criminals trick companies into parting with their money. One company, Pindrop, has reviewed more than 5 billion calls to financial firm’s call centers and said it has started detecting AI-generated voices in the last year. As the development of AI tools advances, the threat is being extended to banks.
Forbes via MSN, September 7, 2023. Blockchain, AI Set to Transform Financial Markets: Moody’s. Blockchain technologies that underpin crypto could help issuers of financial instruments like bonds reduce financing costs in the next five years, according to a report by credit ratings agency Moody’s Investors Service.While incorporating these technologies into businesses could increase IT costs and require “substantial investment” at first, it could help lower expenses over time, the report published Wednesday said. Recent innovations have increased the transformative potential of technologies like artificial intelligence (AI) and distributed ledger technology (DLT) when applied to financial markets, Moody’s said. While AI could potentially reduce operating expenses for financial institutions by automating manual tasks, DLT could “gradually lower financing expenses, especially for smaller issuers,” according to the report.
Reuters, September 7, 2023. Morgan Stanley to launch AI chatbot to woo wealthy After testing it with 1,000 financial advisers for some months, the bank will roll out a generative artificial intelligence bot this month, developed with the makers of ChatGPT, OpenAI. Bankers can use the virtual assistant to quickly find research or forms instead of sifting through hundreds of thousands of documents. The bank is also developing technology which eventually, with clients’ permission, could create a meeting summary of the conversation, draft a follow-up email suggesting next steps, update the bank’s sales database, schedule a follow-up appointment, and learn how to help advisers manage clients’ finances on areas such as taxes, retirement savings and inheritances. The details of the program have not yet been reported.
IMF, September 1, 2023. Joshua Gans argues that assessing the power and pitfalls of AI requires putting it in the hands of people. In a conversation with F&D’s Marjorie Henriquez, Joshua Gans, coauthor of Power and Prediction: The Disruptive Economics of Artificial Intelligence, assesses AI’s impact on the economy, debunks overhyped concerns about the new technology, and explains the challenge of identifying an ethics enforcer. He also discusses why AI should be made accessible through competitive means and traded widely.
Digital Banking – Tech Bullion, September 1, 2023. The Fintech Revolution: Unraveling the Forces Reshaping Finance. Step into the dynamic world of fintech, where disruptive innovations are reshaping the financial landscape as we know it. In a society constantly craving innovation and convenience, the rapid ascent of top fintech companies comes as no surprise. From mobile payment solutions to robo-advisors and blockchain technologies, these pioneers have revitalized financial services, rendering them more accessible, efficient, and user-centric than ever before. Join us on this exhilarating journey as we explore the remarkable rise of these fintech titans and the disruptive forces propelling their success.
BIS Working Papers No 1122. September 7, 2023. gingado: a machine learning library focused on economics and finance by Douglas K G Araujo Monetary and Economic Department. September 2023
Federal Reserve Bank of St. Louis. Artificial Intelligence and Inflation Forecasts Working Paper 2023-015B by Miguel Faria e Castro and Fernando Leibovici. We explore the ability of Large Language Models (LLMs) to produce conditional inflation forecasts during the 2019-2023 period. We use a leading LLM (Google AI’s PaLM) to produce distributions of conditional forecasts at different horizons and compare these forecasts to those of a leading source, the Survey of Professional Forecasters (SPF). We find that LLM forecasts generate lower mean-squared errors overall in most years, and at almost all horizons. LLM forecasts exhibit slower reversion to the 2% inflation anchor. We argue that this method of generating forecasts is inexpensive and can be applied to other time series. Read Full Text; https://doi.org/10.20955/wp.2023.015.
IMF, August 22, 2023. Generative Artificial Intelligence in Finance: Risk Considerations. Shabsigh, Ghiath ; Boukherouaa, El Bachir
In recent years, technological advances and competitive pressures have fueled rapid adoption of artificial intelligence (AI) in the financial sector, and this adoption is set to accelerate with the recent emergence of generative AI (GenAI). GenAI is a significant leap forward in AI technology that enhances its utility for financial institutions that have been quick at adapting it to a broad range of applications. However, there are risks inherent in the AI technology and its application in the financial sector, including embedded bias, privacy concerns, outcome opaqueness, performance robustness, unique cyberthreats, and the potential for creating new sources and transmission channels of systemic risks. GenAI could aggravate some of these risks and bring about new types or risks as well, including for financial sector stability. This paper provides early insights into GenAI’s inherent risks and their potential impact on the financial sector.
Pavlidis, Georgios, Deploying Artificial Intelligence for Anti–Money Laundering and Asset Recovery: The Dawn of a New Era (April 27, 2023). Journal of Money Laundering Control, Vol. 26 No. 7, 2023, pp. 155-166, Available at SSRN: https://ssrn.com/abstract=4570231