In a report released on Monday, Bank of America (BAC) announced that artificial intelligence (AI) technology has the potential to revolutionize the banking industry. Led by analyst Richard Thomas, BAC stated that AI can greatly enhance bank efficiency and productivity, ultimately leading to improved returns for banks.
However, there are also concerns surrounding the use of AI in banks due to its highly regulated nature and access to sensitive data. BAC acknowledged that ongoing dialogue between the industry and regulators is necessary to address these concerns and ensure the security of client assets in a world where AI has reduced barriers for threat actors.
The report highlighted that one of the biggest risks associated with AI in banking is the challenge of keeping client assets secure in a democratized environment. The collapse of several US banks earlier this year was linked to deposit withdrawals accelerated by technology and social media. While regulators may not have a clear antidote to this new reality, BAC noted that if AI technology can deliver tangible efficiencies for European banks and boost returns, it could lead to more stable credit ratings and secure spreads.
While most major banks are already using AI cautiously, BAC believes that if AI technology can deliver tangible efficiencies for European banks and boost returns, it could lead to more stable credit ratings and secure spreads. However, at this stage, the revenue upside from the use of AI technology is less tangible than other areas such as investment banking or trading.