Addressing the complexities and risks of AI in finance

A recent EY survey of 1,200 global CEOs reveals that while executives are investing in AI strategies, they face significant challenges in both developing and implementing these plans. became. More than two-thirds of CEOs recognize the urgent need to address generative AI, but many feel held back by uncertainty in this area. This is in part due to an increase in companies claiming AI expertise, complicating their ability to take bold steps to adopt the technology.

This dynamic hinders strategic decisions about capital allocation, investment, and transformation in an economic landscape characterized by rising interest rates, rising inflation, and complex geopolitical challenges. As a result, this survey reflects the lowest takeover appetite since 2014. Only 35% of CEOs are planning a merger or acquisition in the next 12 months, a trend that is also influenced by geopolitical tensions.

AI-powered synthetic identity fraud has become a serious problem in the financial industry.

A survey of 500 U.S. fraud and risk experts found that half of companies believe their overall fraud prevention measures are only moderately effective. The financial impact of this flaw is significant, with nearly 9 in 10 companies extending credit to synthetic IDs and 1 in 5 companies valuing his average loss per incident at $50,000 to $100,000. doing.

With the help of AI, fraudsters are starting to develop increasingly sophisticated strategies, such as cultivating accounts over long periods of time in order to obtain greater financial returns. As a result, financial institutions struggle with legacy technologies and methodologies that have proven inadequate for these sophisticated, holistic identities. This flaw not only leads to financial loss but also risks reputational damage and competitive disadvantage, highlighting the need for a multi-layered approach to combating AI-generated synthetic identity fraud. .

According to KPMG International’s recent CEO Outlook, only 56% of Canadian executives feel prepared for cyber-attacks, and 93% express concern about the ability of generated AI to amplify vulnerability to breaches. doing. This sentiment is echoed in the KPMG Canada Private Business Survey, which found that 81% of small and medium-sized business (SMB) leaders believe that generative AI is a tool to enhance cyber threat detection, while at the same time We recognize this as a potential catalyst for increased attacks. .

The perception of AI in financial planning varies among investors across generations.

A recent survey found that 62% of investors over the age of 45 were very satisfied with the financial planning advice provided by AI tools, while, somewhat paradoxically, among investors under the age of 45, Only 38% felt the same way. Only 8% of younger investors and 15% of older investors are very reluctant to implement AI advice alone. But when financial planners verified AI recommendations, their comfort level almost doubled to 21%, and the percentage of people who felt very comfortable or somewhat comfortable rose to 52%. Did.

According to a CNBC survey, most Americans have never used ChatGPT, are not enthusiastic about using generative AI for financial advice, and respondents are more interested in using AI for money management. Only 37% of people 11% are very interested, but only 4% currently use such tools. Similarly, the CFP Board survey cited above found that 51% have little trust in his AI financial advice and believe that he is the only one who feels comfortable using AI advice without additional verification. was found to be only 31%.