According to a research report released by Bank of America (BAC) on Monday, the utilization of artificial intelligence (AI) technology holds the promise of enhancing the efficiency of banks. However, there are challenges that need to be addressed.
Analysts, spearheaded by Richard Thomas, have highlighted certain vulnerabilities associated with the widespread adoption of AI in the banking sector. The report underscores that advanced technology can indeed enhance banks’ efficiency, leading to improved returns.
The report emphasizes the necessity for banks and their leaders to familiarize themselves with the risks that come hand in hand with the integration of AI. It acknowledges the ongoing dialogue between the market participants and regulatory authorities, noting the heavily regulated nature of the market and the abundance of sensitive data involved.
Security concerns and the imperative task of safeguarding consumer assets in a decentralized AI environment, which also presents reduced barriers for malicious actors, are identified as key areas of apprehension by the authors.
Addressing the recent downturn of several U.S. banks earlier this year, the report points out the role of technology and social media in accelerating deposit withdrawals. It also raises questions about the regulators’ preparedness to counter this evolving landscape effectively.
While acknowledging that most major banks are gradually embracing AI, the report suggests that significant efficiency gains from this technology could potentially translate into enhanced credit ratings and stable spreads for Western banks.
Bank of America notes that the immediate revenue benefits from AI implementation remain somewhat inconspicuous at present.
