People love ChatGPT, but could AI harm our financial system?

Chair of the Australian Securities and Investments Commission (ASIC) Joe Longo on Tuesday told a forum that while AI has many uses in the financial space, regulating it could be tricky.

“Recent developments, especially in the field of generative AI, represent a step change, and potentially create new and different risks and issues,” Mr Longo said.

“But there is another, very practical, issue concerning explainability with some forms of AI. Put simply, if you can’t explain how a particular system works – and it seems that this is the case with some complex AI systems – how can you justify using it?”

Mr Longo also noted ASIC has a high and important priority on AI, with the technology offering potential benefits for consumers, small business, and markets.

“As we realise the potential of tech, we have to do all we can to avoid negative disruption, learned market abuse, misinformation, discrimination, and bias – whether intended or unintended,” he said.

Generative AI can create text, images, or other media on the back of user prompts; arguably the most prominent platform is ChatGPT, with Google and Microsoft also offering their own.

It also has the capacity to offer user-prompted financial advice, though ChatGPT's data is currently limited in scope with data current to 2021.

Consumer and regulatory sentiment at odds

The majority of consumers trust generative artificial intelligence to help with their finances, according to new research.

According to a new study from the Capgemini Research Institute, more than 50% of the 10,000 consumers surveyed across 13 countries, including Australia, would trust generative AI with personal financial planning.

Niraj Parihar, Insights & Data Global Business Line CEO and member of Capgemini Group Executive Committee, dubbed consumers’ awareness of generative AI “remarkable".

However, he said they failed to understand how the technology works and the risks it can pose.

“Generative AI is not ‘intelligent’ in itself; the intelligence stems from the human experts who these tools will assist and support,” Mr Parihar said.

“The key to success therefore, as with any AI, is the safeguards that humans build around them to guarantee the quality of its output.”

For example, personal finance app Wally recently launched the world’s first generative AI-powered personal finance assistant.

Users around the world can ask WallyGPT about their spending habits, savings goals, or investments and receive personalised answers – for free.

However experts doubt it could fulfil the roles of human financial advisers - former financial adviser and host of the my millennial money podcast Glen James said the technology should be embraced to lower the cost of advice delivery.

“AI for financial professionals can be a great tool to assist in advice and tasks that may not need emotional discretion,” Mr James said.

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