ECB urges new regulations for AI in finance

The European Central Bank (ECB) is calling for a close watch on the use of artificial intelligence (AI) in finance. While they acknowledge its potential benefits, they also warn of the risks to consumers and financial stability, which suggests possible regulations in the future, Reuters reported on Wednesday.

The ECB acknowledges the benefits of AI in finance, such as enhanced data handling and customer service, along with heightened cybersecurity. However, they also warn against pitfalls like herd behaviour, reliance on a few AI providers, and increased vulnerability to sophisticated cyber threats.

The European Union has established groundbreaking regulations for artificial intelligence, mandating transparency and compliance with copyright laws, especially for high-risk AI systems. Despite this, the ECB notes that adoption of such systems in European finance is still nascent, with concerns over risks and reputational issues potentially slowing down the uptake of generative AI.