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The Role of Generative AI in Financial Decision-Making: Opportunities, Risks, and Regulatory Challenges.
- The paper explores the unique capabilities of GenAI, such as producing new content and insights, which distinguishes it from traditional machine learning.
- It highlights opportunities in areas like fraud detection, real-time risk management, sentiment analysis, and personalised financial services.
- Key risks identified include the "black box" nature of AI (lack of transparency), the potential for biased outcomes, and the phenomenon of "hallucination," where the AI generates false but plausible information.
- The text discusses regulatory challenges, noting that current frameworks are insufficient for addressing issues like algorithmic transparency, data management, and systemic risks such as market concentration.
- It concludes by advocating for the development of robust governance frameworks, including explainable AI (XAI) and increased AI literacy for professionals.
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