World Economic Forum warns that artificial intelligence may destabilize the financial system.

Jonah Whanau

2018-08-19 10:34:00 Sun ET

The World Economic Forum warns that artificial intelligence may destabilize the financial system. Artificial intelligence poses at least a trifecta of major risks to the financial ecosystem. First, inadequate user data validation and authentication may threaten consumer consent and privacy. The recent Facebook-driven Cambridge Analytica debacle causes major user privacy concerns and worries about the use and abuse of artificial intelligence applications in macrofinance and other financial services.

In August 2018, Google, Facebook, and Twitter have to remove numerous pages and posts to clean up their social networks due to Russian and Iranian inauthentic coordination for political purposes. Also, the Trump administration further blocks the potential acquisitions of U.S. electronic payment service providers by China's Ant Financial Group due to national economic security concerns. Tech platforms such as Facebook, Google, Apple, Amazon, and Microsoft should share the blame for egregious user privacy invasion and non-authentic user data access.

Second, technological advances in both cloud-computing power and algorithmic trade telecommunication help mold a highly non-linear and dense financial network. As an inadvertent consequence, one node of this network can cause exogenous shocks to propagate quickly and unpredictably to other parts of the global financial ecosystem.

As an inadvertent consequence, one node of this network can cause exogenous shocks to propagate quickly and unpredictably to other parts of the global financial ecosystem. Typical examples include the U.S. subprime mortgage crisis and the European sovereign debt crisis with severe socioeconomic malaise throughout the global economic recession from 2008 to 2012.

Third, artificial intelligence applications may induce online financial service users to engage in risky transactions that expose them to fraud or other cyber hazards. For instance, Bitcoin, Ethereum, Litecoin, and other cryptocurrencies exhibit highly volatile price fluctuations and hefty techy barriers to entry. Some of these crypto-currencies may involve esoteric investment projects in financial crime, collusion, or terrorist finance. In fact, several famous financial market experts such as Warren Buffett, Jamie Dimon, and Jim Cramer recommend stock investors to refrain from trading cryptocurrencies. Cryptocurrencies cannot be a valid authentic medium of exchange because only a few countries accept them as fiat money or legal tender. Neither can these cryptocurrencies serve as a reasonable store of value because the vast majority of them exhibit extreme price variation within a short time frame.

Overall, most current artificial-intelligence-driven financial applications raise these concerns and so may destabilize the global network of financial service providers.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More

Paul Morland suggests that demographic changes lead to modern economic growth in the current world.

Laura Hermes

2023-10-28 12:29:00 Saturday ET

Paul Morland suggests that demographic changes lead to modern economic growth in the current world.

Paul Morland suggests that demographic changes lead to modern economic growth in the current world. Paul Morland (2019)   The human tide: how

+See More

USPTO fintech patent protection and accreditation

Andy Yeh Alpha

2023-01-03 09:34:00 Tuesday ET

USPTO fintech patent protection and accreditation

  USPTO fintech patent protection and accreditation   As of early-January 2023, the U.S. Patent and Trademark Office (USPTO) has approved

+See More

American parents often worry about money and upward mobility for their children.

Becky Berkman

2019-01-03 10:38:00 Thursday ET

American parents often worry about money and upward mobility for their children.

American parents often worry about money and upward mobility for their children. A recent New York Times survey suggests that nowadays American parents spen

+See More

U.S. regulatory agencies may consider broader economic issues in their antitrust probe into Amazon, Apple, Facebook, and Google.

Joseph Corr

2019-07-03 11:35:00 Wednesday ET

U.S. regulatory agencies may consider broader economic issues in their antitrust probe into Amazon, Apple, Facebook, and Google.

U.S. regulatory agencies may consider broader economic issues in their antitrust probe into tech titans such as Amazon, Apple, Facebook, and Google etc. Hou

+See More

President Trump tweets that Apple can avoid tariff consequences by shifting its primary supply chain from China to America.

Olivia London

2018-09-11 18:36:00 Tuesday ET

President Trump tweets that Apple can avoid tariff consequences by shifting its primary supply chain from China to America.

President Trump tweets that Apple can avoid tariff consequences by shifting its primary supply chain from China to America. These Trump tariffs on another $

+See More

The recent arrest of HuaWei CFO may upend the trade truce between America and China.

Fiona Sydney

2018-12-13 08:30:00 Thursday ET

The recent arrest of HuaWei CFO may upend the trade truce between America and China.

The recent arrest of HuaWei senior executive manager may upend the trade truce between America and China. At the request of several U.S. authorities, Canadi

+See More