According to a research report released on Monday by Bank of America (BAC), AI technology has the potential to revolutionize the banking industry. Led by analyst Richard Thomas, the report identified automation as the first and most significant application of AI technology in banking.
The use of AI can significantly enhance bank productivity and boost returns. However, there are also risks associated with the widespread adoption of AI in banks, particularly in light of the highly regulated nature of the industry and access to sensitive data. As such, it is crucial for banks and regulators to be comfortable with these risks before fully embracing AI technology.
One concern raised in the report is 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. While there may be no clear antidote to this new reality, ongoing dialogue between the industry and regulators is necessary to address these concerns.
While many major banks are already cautiously using AI, if tangible efficiencies can be achieved through its use, European banks could see recognition with more stable credit ratings and secure spreads. However, Bank of America noted that at this stage, the revenue upside from using AI technology is less tangible.