The rise of artificial intelligence—benefits and risks for financial institutions and financial stability

Table of contents

• Opportunity for financial institutions—enhanced processing and generation of data
• Associated risk—data quality issues
• Opportunity for financial institutions—adaptability, flexibility, and scalability
• Associated risk—bias, hallucination, and substantial complexity
• Opportunity for financial institutions—increased efficiency
• Associated risk—less predictability, misuse, and overreliance
• Opportunity—improved accuracy of quantitative predictions
• Associated risk—reduced robustness of predictions
• Opportunity for financial institutions—improved efficiency of operational processes
• Associated risk—increased operational risk and third-party dependence

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Article summary

Banking & Finance analysis: This News Analysis looks at the key points made in the European Central Bank’s Financial Stability review, published in May 2024. The review looks at the rise of artificial intelligence (AI) and the benefits and risks it holds for financial institutions and financial stability more generally.