What are the ethical considerations when utilizing AI throughout the financial decision-making process?
Like many other industries, using artificial intelligence (AI) in the financial sector is quickly becoming the norm. However, this has led many to question the ethical implications of utilizing AI in making financial decisions.
The following article discusses the ethical implications of using AI for financial decision-making.
AI In Finance – Is It the Future?
Artificial intelligence enables programs or machines to act and learn like humans, using complex algorithms to process data quickly and ultimately make decisions. Along with many other industries, AI technology has revolutionized the financial sector.
Various finance sector companies are increasingly using AI for fraud detection, investment analysis, credit scoring, and portfolio management tasks.
There are two main categories that AI falls into, unsupervised and supervised learning.
- Supervised Learning is when algorithms know what to look for and have been trained with preset datasets.
- Unsupervised Learning is when algorithms are left to explore data by themselves.
Both categories allow AI algorithms to identify patterns and make financial predictions based on data collected. Along with improving efficiency and accuracy, AI will reduce the costs and time associated with manual data processing. It also eliminates the potential for human error, which currently sits at approximately 1%.
Ethical Concerns Surrounding the Use of AI In Finance
Many companies incorporate AI technology into their financial operations and decision-making process as AI improves. While AI offers numerous benefits in the financial industry, including better risk management, efficiency, improved accuracy, and faster turnaround time on decisions.
However, we can’t ignore the ethical implications of using AI in the finance sector. Some of the ethical concerns of AI include:
- Inherent Biases are when AI algorithms learn from the biases already present in their initial programming, which could lead to prejudice or discrimination.
- Security Risks include potential online threats, access to personal data, and a lack of transparency in the decision-making process.
- Privacy Concerns arise because AI algorithms access an incredible amount of data quickly. Concerns have arisen about what information they collect, how they manage it, and how that personal information is used and stored.
A Balance of Responsibility and Innovation
The three ethical issues above outline the need for financial companies to carefully consider ethics when utilizing AI algorithms and programs throughout the financial decision-making process.
Carefully balancing responsibility and innovation while considering the ethical impact of decisions made using AI algorithms is paramount. Suppose finance companies take all steps possible when setting parameters and rules for AI programs. In that case, they’ll be able to ensure that they are not only getting the maximum benefit from AI algorithms for their clients but also protecting themselves from any potential liability that may arise through AI.
AI technology has the potential to completely revolutionize the financial industry and the way that financial investments are made. However, like any new technology, careful consideration must be given to its ethical implications.
At Kamino, we’re 100% committed to ethical practices and transparency, and our team works diligently to ensure that we have full oversight throughout the AI decision-making process. We have carefully balanced responsibility with innovation to provide our clients with the best possible financial advice.
If you have any questions or would like to learn more about Kamino, please don’t hesitate to reach out and contact us directly.