Janet Yellen warns AI in finance poses ‘significant risks’

Treasury Secretary Janet Yellen is expected to warn bankers and tech executives on Thursday that while artificial intelligence could open the door to vast rewards for the financial system, the technology also threatens to introduce new dangers, according to speech excerpts shared first with CNN.

Treasury Secretary Janet Yellen is expected to warn bankers and tech executives on Thursday that while artificial intelligence could open the door to vast rewards for the financial system, the technology also threatens to introduce new dangers, according to speech excerpts shared first with CNN. Yellen’s speech at a conference on financial stability represents her most extensive remarks to date on AI. It comes as investors scramble to get a piece of the AI boom, tech giants embark on an AI arms race and regulators worry about what could go wrong. “The tremendous opportunities and significant risks associated with the use of AI by financial companies has moved this issue toward the top” of financial regulators’ agendas, Yellen plans to say in the prepared remarks to be delivered at the conference, which is being held on Thursday at the US Treasury Department and on Friday at the Brookings Institution. On the opportunity side, Yellen will note how AI has already been used by investors to support forecasting and portfolio management and by banks to fight fraud and support customer service, according to the prepared remarks. Going forward, Yellen is expected to say AI’s “rapid evolution” could pave the way to make financial services cheaper and easier to access, pointing specifically to advances in natural language processing, image recognition and generative AI.