The WEF warns that AI could destabilize the financial system

Artificial intelligence will certainly change the financial world in the near future, automating investment and other services — but it can also make the imbalance in the systematic weaknesses and risks, according to the World economic forum (WEF).

The report, based on interviews with dozens of leading financial experts and industry leaders, concluded that the artificial intelligence will destroy the industry, allowing the pioneers to gain a competitive advantage. It also follows that technology will lead to the emergence of more convenient products for consumers, such as sophisticated tools for managing personal finances and investments.

What will happen with the banks in the future?

But most importantly, the report indicated the possibility for large financial institutions to create services based on machine learning that are in the cloud and accessed by other agencies.

“The dynamics of the machine learning creates a strong incentive to consolidate back office,” says the lead author of the report, Jesse Mcwaters. “A more connected world is more vulnerable to cyber security risks and risks of concentration”.

In other words, the financial system, which include machine learning and is accessible through the cloud for many institutions, can be a delicious target for hackers and a single point of system failure.

Wall Street is rapidly developing machine learning technology, which is located in the centre of the boom of artificial intelligence. The financial companies have lots of data and lots of incentives to innovate. Hedge funds and banks hire experts in the field of AI as quickly as possible, and the financial industry is experimenting with full automation of the back office. Automation of high-frequency trading always have created the systemic risks. The whole system can be much more vulnerable because of its complexity.

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