In a recent research report, Bank of America (BAC) revealed that Artificial Intelligence (AI) technology has the potential to enhance the efficiency of banks. According to analysts led by Richard Thomas, greater automation is likely to be the first and greatest application of AI technology for banks. The use of AI can improve bank productivity and thereby enhance bank returns. However, there are also vulnerabilities surrounding the broad use of AI in banks.
One major concern is the security of client assets and the challenge of keeping them safe in a world of democratized AI, which has reduced barriers to threat actors. This was highlighted in the collapse of several US banks earlier in the year, which was accelerated by technology and social media. It is “less obvious that regulators have a clear antidote to this new reality.”
While most major banks are already using AI cautiously, if it can deliver tangible efficiencies for European banks and boost returns, there will be recognition with more stable to higher credit ratings and secure spreads. However, Bank of America noted that the revenue upside from the use of AI technology at this stage is “less tangible.” Ongoing dialogue between the industry and regulators is necessary to address these concerns and ensure that AI technology is used safely and responsibly in banking.