BoE’s Carney says data bias and privacy trade-off challenges AI in finance

Fintech must develop in a way that maximizes the opportunities and minimizes the risks for society, said Bank of England Governor Mark Carney in a presentation at the Machine Learning and the Market for Intelligence Conference at Rotman School of Management, University of Toronto, on 23 October 2018.

Carney discussed the macro impacts of artificial intelligence, explained that while there is little evidence of technological unemployment over the long term, technology affects the labor market through destruction and productivity and is polarizing the labor market.

He also discussed in which areas of finance artificial intelligence is developing and what kind of policies and frameworks need to develop.

Source: Bank of England

 

 

 

 

 

 

 

 

 

 

 

Carney also discussed artificial intelligence in prudential regulation, and noted that AI in finance is challenged by:

• The implications of structural shifts and long-term value drivers (like demographics, climate change and AI itself!)
• Too little data (known unknowns—Knightian uncertainty)
• The auditability and interpretability of black box algorithms
• Increased dependency on third parties, single points of failure outside regulatory perimeter
• Bias in data and increased interconnections could lead to potentially procyclical behaviour
• Fundamental trade-offs between innovation and competition and performance and privacy

Read the full presentation

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