Financial regulator warns on artificial intelligence risk

The increased use of artificial intelligence in financial services could pose a risk to stability, according to an international regulator. The Financial Stability Board, which includes all G20 major economies, has published a report on the implications of the increasingly widespread use of machine learning and artificial intelligence in the financial sector. It has raised concerns about an "arms race" for the use of artificial intelligence, with financial services companies investing in it simply because their competitors are. While the report said there were likely to be benefits from this development, such as the more efficient processing of information and improved regulatory compliance, this was not without risks because of the potential emergence of new "systemically important" players. The report said: "AI and machine learning services are increasingly being offered by a few large technology firms. "Like in other platform-based markets, there may be value in financial institutions using similar third-party providers given these providers' reputation, scale, and interoperability.