A research report released by Bank of America (BAC) on Monday highlighted the potential benefits of artificial intelligence (AI) technology for banks. According to analysts led by Richard Thomas, the use of AI can improve bank productivity and enhance bank returns through greater automation. However, there are also vulnerabilities associated with the widespread adoption of AI in banks that must be addressed.
The report noted that banks and supervisors must be comfortable with the risks associated with implementing AI technology due to the industry’s highly regulated nature and access to sensitive data. Ongoing dialogue between the industry and regulators is necessary to address these concerns, particularly as it relates to the security of client assets in a world where democratized AI has reduced barriers to threat actors.
The collapse of several US banks earlier this year was linked to deposit withdrawals accelerated by technology and social media, highlighting the challenges posed by this new reality. While most major banks are already using AI cautiously, if tangible efficiencies can be delivered for European banks through its use and boost returns, recognition will follow with more stable credit ratings and secure spreads. However, BAC noted that at this stage, the revenue upside from using AI technology is “less tangible.”