In a research report released on Monday, Bank of America (BAC) announced that Artificial Intelligence (AI) technology has the potential to improve banks’ efficiency. According to analysts led by Richard Thomas, the first and greatest application of AI technology in banks is likely to be greater automation. This use of AI can enhance bank productivity and ultimately lead to higher returns.
However, there are vulnerabilities associated with the widespread adoption of AI in banks. The highly regulated nature of the industry and access to sensitive data pose significant risks that require careful consideration by both banks and supervisors. The report emphasized the need for ongoing dialogue between the industry and regulators to address these concerns.
The report also warned that concerns about client asset security are likely to be a major focus, given the democratization of AI technology that has reduced barriers for threat actors. The collapse of several U.S. banks earlier in the year was linked to accelerated deposit withdrawals facilitated by technology and social media, highlighting a lack of clear antidote from regulators in this new reality.
Despite these challenges, most major banks have already started using AI cautiously, with European banks already benefiting from tangible efficiencies and improved credit ratings. However, Bank of America noted that while revenue upside from AI technology at this stage may not be immediately apparent, it has potential for long-term growth if used effectively.