The great AI balancing act: how to boost innovation whilst maintaining resilience


One technology that has without a doubt caught fire in 2023 is artificial intelligence. The debut of OpenAI’s ChatGPT Generative AI platform earlier this year has offered a springboard for new companies to innovate and disrupt the financial market like never before.

During the recent AI in Financial Services Forum in London, key industry experts discussed the topic of AI innovation in tandem with the need to maintain operational resilience. Taking part in the discussion was chair Henry Umney of Mitratech, Madush Gupta of the City of London, Pallavi Trehan and Usman Wahid of KPMG Law.

The discussion – which lasted 45 minutes – explored a range of topics on this matter, including pondering what contributes to a successful AI strategy and debating how to best foster a culture of continuous learning around artificial intelligence.

With ChatGPT recently celebrating its first birthday, the rise of the platform has been stratospheric – securing 1 million users within its first five days. In comparison to other platforms, it took Twitter two years to achieve this. While the innovation and expansion of the platform is moving at a breakneck speed, there is a vital need to maintain its resilience long term.

At the kick-off of the panel, Umney highlighted a recent example by actors to balance these competing factors with an executive order by the Biden Administration seeking to pursue an aggressive strategy on AI whilst also mitigating the risks that come with it.

Judgement and ownership

A question that has been regularly asked on the rise of this technology pervades the idea of ownership and management of the technology – who is controlling it, and can it be controlled long term?

On this topic, Umney highlighted, “There are two topics that come into the resilience agenda – where do we sit on professional judgement and ownership, and can we give that to our AI models?” Highlighting what is still a remaining unease of many with the technology, he also raised a recent comment made by Securities and Exchange Commission chair Gary Gensler, who stressed his worry that a financial crisis would be ‘unavoidable’ within a decade if regulators failed to manage AI risks.

With such factors and predictions considered, a balancing act between the two could be vital for the future health of the technology. Lloyds’ Trehan underlined that while AI is not new, ChatGPT has helped to fast track the hype around it, leading to it now becoming one of if not the hot-button topics of discussion in company boardrooms. Despite Trehan’s team being regular users of the technology, its role as the ‘third line of defence’ means that the technology must be used responsibly.

She said, “Depending on who you ask, some say AI will be the destruction of our civilization. Others say it would be the cure for cancer – I believe it could actually be both. That is how we like to think about AI, in that It has risks and it has opportunities.”

One of the key opportunities from AI being regularly emphasised by financial services firms centers around having the human in the middle, stressed Trehan. Increased focus on customer-facing processes and company and employee productivity are also being discussed as benefits from the technology, as well as how better services can be offered to customers. These factors, in the view of Trehan, are providing a level of resilience.

She also provided a recent example of Telco provider Comcast, where a customer – instead of just communicating with a chatbot – decided that another chatbot would engage with that chatbot – leading to that individual saving money on their subscription by just threatening them with legal implications and implications around poor service.

“We generally hope humans talk to those chatbots, but what happens when an AI starts talking to another AI?” said Trehan. “How can we do risk visualization? How can we do predictive analytics to stop bad things from happening? A Tesla car can stop and actually predict an incident would happen – so using AI to better enhance our operational resilience is front of mind.”

Sound policy and skills

A key route to establishing a balance between innovation and resilience will undoubtedly come from policy. Madush Gupta of the City of London Corporation highlighted it was doing considerable policy work in the area of AI – and while seeing it as a growth opportunity, also making sure this growth opportunity can be delivered safely.

He detailed, “AI – from a personal productivity perspective – is near ubiquitous today. We all have access to personal productivity AI, it’s about how AI within an organisation is delivering organizational outcomes for clients in a way that can be evidenced and regulated. For us, if we’re looking at financial services, the regulator needs to come on a journey and needs to upskill its own internal capability in order to regulate AI-driven and delivered services.”

The Corporation is also using its clout to improve skills around AI, recently launching a new qualification in AI Ethics as well as helping to reskill people mid-career who want to pick up digital skills.

Wahid of KPMG Law used his opportunity to discuss another key guardrail relating to this issue – is there sufficient governance and oversight over AI as it develops within financial services? In this area, he highlights that this question relates more to whether the industry has the people with the right technical and non-technical skills who can apply a governance process over AI, as opposed to receiving a questionnaire and assuming that all the questions are correct.

Despite AI being a technology that has had a relatively long-term presence within the industry, with its increasing reach due to the onset of Generative AI technologies there are

new questions to be asked. “We know some of the big foundational models, but they’ve not been used in the same way a core banking platform could have been used – is there sufficient ability to do due diligence over these foundation models to ensure they have the right level of resilience?

Changing tack

The resilience agenda is nothing new, especially in the area of financial services. The need for financial companies to be able to ensure long-term stability and resilience in their products is vital. While AI has long been part of this resilience package, its explosion this year has meant many firms have needed to change tack and bump this up the list of importance.

The change in the way AI is used means many companies are having to adapt. On this point, Trehan stated that there is a distinction between internally and externally facing use cases of AI, and in her view, the financial services industry is still quite considerate when it comes to using AI at scale for external clients, with it mostly being used as a productivity tool.

Despite this, Trehan states that banks see this as a big opportunity, especially in the space around cybersecurity. “The game around cybersecurity globally is changing, where you could have humans attacking banks as well as national infrastructure, and we now have the power and muscle of artificial intelligence systems,” she said.

The event was hosted on November 16th and brought together senior decision makers from across the financial services industry.

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