AI risks in fintech need to be managed: Ravi Menon

Data privacy and accountability among risk factors raised by ex-chief central banker

- Prisca Ang

Artificial intelligence (AI) presents huge benefits for the financial sector but risks need to be managed so that its potential can be harnessed safely, said former chief central banker Ravi Menon on Nov 6.

Data privacy is one consideration. There is also a need to minimise the "black box syndrome", where the massive amount of data, complexity of algorithms and dynamic nature of AI systems make results difficult to interpret and explain, he added.

Accountability is another factor, noted Mr Menon in his keynote address at the Singapore FinTech Festival. "How can we hold humans ultimately responsible for decisions made by self-learning algorithms and machines? You cannot charge a machine for negligence in a court of law. You need to charge a person."

There is also a need to minimise unconscious bias, social exclusion and ethically unacceptable outcomes.

"AI models trained on incomplete or biased data can generate seemingly plausible but unsound predictions. These can in turn lead to flawed financial decisions regarding credit or investments," said Mr Menon, chairman of the Global Finance and Technology Network (GFTN), a not-for-profit entity newly formed by the Monetary Authority of Singapore (MAS).

GFTN's forums will have a growing emphasis on AI and quantum computing. Conferences are one of the network's four business lines, along with advisory and research services, digital platform services for firms, and an investment fund for technology start-ups.

If quantum technologies take off, the coupling of AI and quantum computing could unlock huge opportunities, as well as unprecedented security challenges, said Mr Menon.