AI in the Financial Industries: Between Apathy and Hysteria

Abstract

Financial industries are key players and enablers in the world economies. AI, together with climate change, poses a paradigm shift in any business decision-making, as well in the financial industries. The extreme positions—apathy on the one side, and hysteria on the other—are illustrated and declassified as non-options. The sweet spot to strive for is being worked out by reflecting on the current stage of financial services. The opportunities derived from the digital transformation are explained as well as the challenges posed by requirements for new skills, changing roles, and cultural new thinking. Shortcomings on biased AI applications originating from flawed data, responsibility and involvement of a very small group of programmers, and the problem of opaque algorithms are demonstrated using specific examples. Their ethical consequences, in particular discrimination, are elaborated. The sweet spot between apathy and hysteria envisaged by de-biasing approaches is explained and an appeal for virtuous handling of AI is developed.