The proliferation of AI-based systems might lead to massive amounts of data falling into the wrong hands, or widespread disruption of vital services, a new report warns.

There is a greater risk as artificial intelligence increases data collection and aggregation, according to the Centre for the Study of Financial Innovation (CSFI). The paper also asks whether AI could contribute to a future financial crisis.

“This is a highly speculative question, but it is starting to be raised and is worth exploring,” the report says. “One trigger might be a particularly sharp ‘flash crash’, where many interconnected AI trading programs react in the same way to some market event.”

CSFI, a non-profit think-tank, acknowledges AI’s benefits for efficiency and cost saving. It adds that AI does not just mean faster computing, but major changes to financial services infrastructure.

“A brand new suite of technologies, centred around ML [machine learning], will change financial services in fundamental ways – both in terms of efficiency and new capabilities,” it says. “The scale of this transformation could swiftly match or surpass the impact that IT has had on the industry over the past few decades.”

Potential benefits of AI-based systems include lower costs, lower error rates, and more personalised services that are accessible all the time, according to CSFI.

The risks include lack of transparency around decision-making as well as risks to consumer protection and how personal data might be used.

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