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Financial sector struggles with the gifts and dangers of AI, executives say | The Mighty 790 KFGO

Financial sector struggles with the gifts and dangers of AI, executives say |  The Mighty 790 KFGO

By Ross Kerber and Suzanne McGee

CHICAGO (Reuters) – The spread of artificial intelligence-based systems presents big opportunities for financial services firms, executives say, but asset managers also face bigger stakes than other consumer-facing companies because they manage sensitive information.

For example, AI systems could be better than humans at explaining to clients why they made recommendations such as portfolio allocations or credit decisions, said Zack Kass, former head of Business Partnerships at OpenAI. Humans, he said, aren’t good at explaining unconscious biases that can influence those decisions.

“AI should make that a lot better. The problem is, if we’re not careful, it will only get worse,” Kass said at an investor conference hosted by Morningstar this week in Chicago, where the rise of AI systems was a hot topic.

According to several investors and technology experts, AI will theoretically simplify many routine tasks, such as filling out compliance forms or developing portfolios that are not as complex. This frees up finance professionals to focus on human interactions or issues that require deeper consideration.

“There are a number of things that machines could iron out, and then a financial advisor could spend more time serving their clients,” said Karen Zaya, a senior research analyst at Morningstar who tracks investment managers’ use of technology.

But the depth of human interactions with AI will vary, she said. While AI-powered chatbots have become common for tasks like helping you choose an airplane seat or checking a bank balance, she said, the variables are much more complex for things like arranging investments in a retirement plan.

“I don’t think that’s on the agenda for the industry right now,” Zaya said. “All of these companies that we’ve talked to are very thoughtful and careful in how they implement these things. They want to be taken very seriously.”

U.S. regulators are asking for public comment on financial firms’ use of AI to promote inclusive and equitable access to their services. Treasury Secretary Janet Yellen warned this month that using AI in finance could reduce transaction costs but comes with “significant risks.”

The spread of AI could tempt companies to cut jobs in places like call centers or software development facilities, but it’s still likely they’ll need human workers to handle more complex queries, says Margaret Vitrano, portfolio manager for ClearBridge Investments.

“AI could be used to develop code, but that doesn’t mean you should fire all your developers. You might use it to develop the initial code, and then you still need someone who is advanced and knows code to look at it and say, let’s think about the user experience here,” Vitrano said.

Brenda Ingram, a Chicago-based financial advisor, says she hopes AI systems can save time and money when preparing things like compliance reports.

“The mundane, if you can get the AI ​​to do it, I think we’ll enjoy it,” she said.

(Reporting by Ross Kerber and Suzanne McGee in Chicago; Editing by Jamie Freed)