SEC Chairman, Gary Gensler, warns that Artificial Intelligence (AI) could potentially cause a financial crash in the late 2020s or early 2030s due to concerns about the use of AI models by Wall Street banks. Gensler calls for rules that address AI models made by tech companies and their usage by banks, highlighting the need for a “cross-regulatory challenge.” While some banks, like Morgan Stanley and JPMorgan, are keen on using AI, others, such as Goldman Sachs, Deutsche Bank, and Bank of America, are more cautious. The SEC’s concerns shed light on the transformative impact of AI on the financial industry.
SEC Chair Warns AI Could Trigger Next Financial Crisis
The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has issued a warning about the potential risks of Artificial Intelligence (AI) in the financial industry. He believes that AI could cause a financial crash in the late 2020s or early 2030s.
Gensler expressed concerns about the use of AI models by Wall Street banks, suggesting that they could be a root cause of the next financial crisis. He emphasized the need for rules that address the AI models created by tech companies and how banks utilize these models, referring to it as a “cross-regulatory challenge.”
Currently, regulations focus on individual banks or money funds, but many banks may be using the same AI model or data. Gensler argues that comprehensive rules are necessary to consider the broader picture rather than addressing each institution separately.
While some banks, like Morgan Stanley and JPMorgan, are actively adopting AI to assist financial advisers and traders, others, such as Goldman Sachs, Deutsche Bank, and Bank of America, are more cautious and have restricted the use of certain AI tools.
The SEC’s warning highlights the importance of understanding how AI is transforming the financial industry. To stay competitive and leverage AI effectively, companies should:
1. Identify Automation Opportunities:
Locate key customer interaction points that can benefit from AI.
2. Define KPIs:
Ensure that AI initiatives have measurable impacts on business outcomes.
3. Select an AI Solution:
Choose tools that align with specific needs and offer customization options.
4. Implement Gradually:
Start with a pilot program, collect data, and expand AI usage judiciously.
For AI KPI management advice and insights into leveraging AI, connect with us at hello@itinai.com. Stay updated on AI news and trends through our Telegram channel t.me/itinainews or Twitter @itinaicom.
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