Dexter Nguyen

Op-Ed 3

Ethical challenges of using AI in the banking & financial industry

For the past few years, the rise of AI application has positively impacted on the financial industry in

almost every area. However, its potential is not guaranteed, resulting in many questions around the

ethical awareness and responsibility of financial professionals, whose jobs technically seems to be

replaced. As no one knows exactly who is responsible for AI decisions and actions, the dispute around

this issue is opening the door to a multi-dimensional analysis.

The inevitable development of AI technology offers unlimited benefits for the banking and financial

sector. First, AI is increasingly using its huge potentials to help people make better sense of their

money, automate actions to promote financial wellbeing and help rebuild trust between banks and

customers. In the fintech industry, we’ve seen ROBO advisors that aim to replace finance

professionals such as bankers, financial planners, financial advisors and such by providing customers

and businesses investment advice, or by providing people recommendations to increase their earnings

from stock assets. We’ve also witnessed how Chatbots has changed the way we define customer

service with self-serve platforms. Second, automation motivates actions that serve the customer’s

best interest, such as transferring money across accounts to avoid overdraft fees and switching to

better providers and products. Automation may also be helpful for people with mental health

conditions who experience a lack of control over their spending habits and want to pre-commit to

certain behaviors. Despite the fact that some authorities have publicly spoken their concerns about

ethical issues happening to industry’s employees when their physical job junctions can disappear,

what the industry is truly reacting shows the contradiction. Since AI would and is automating a lot of

routine tasks and performing them in a more efficient and reliable manner, the roles and

responsibilities in a workplace are going to transform. Banks and financial services are consistently

keeping a lookout for what kinds of roles are getting eliminated by AI application before issuing an

alternative action plan to upskill such employees through training and education.
 Dexter Nguyen
Op-Ed 3

The potential is big, but the challenge is bigger. One of the standards, which are being challenged, is

the transparency about the use of AI in the industry. History shows that many big names used to

disappoint loyal customers by betraying their trust. In 2018, there might be no exception when the

United States saw a 20-point drop on the Edelman Trust Barometer when it came to consumer trust

in financial services. While AI technology provides immense opportunity to help build trust through

personalized advice and coaching, as well as confidential human-like conversations, these intelligent

systems are still emerging and unfamiliar to the general public, who are already using an AI tool, but

don’t realize it. So, the question is how banks can be more transparent about the use of AI technology?

They need to balance between offering a human interaction, while still being apparent to the user that

this is the work of conversational AI. Talking about the second challenge, customers have a reason

to question the accountability when they are served by AI technology. Who is responsible for the

outcome of the decision-making process of an artificial agent chatting with you via a mobile device?

Who should be answerable to the consequences of incorrect advice of an AI algorithm? Ideally, the

parties, companies, or organizations who have produced the algorithm should take responsibility for

all the decisions taken by the AI model. But what about the banks or financial services to which you

are dealing? What are their roles in solving your problems? There has no right and legal answer in

near future. Finally, one of the top concerns of AI by far is its threats to consumers’ data and privacy.

A bank can hold a large store of data about their customers as a way to enhance the performance of

AI platforms. Although in Europe, we’ve already seen data privacy laws coming into effect to govern

and protect consumer data, there are still big legal gaps in many other countries around the world.

Nothing happens if the whole banking and financial industry carefully consider how they handle

customers’ personal data collected. However, no one is sure that they are treating it properly by

limiting usage and access.