AI risks and challenges5 AI still poses great risks to financial services with, increasing concerns of misinformation, deepfakes and data privacy. AI is eliciting much enthusiasm among industry leaders; yet this is not without reservations. In addition to workforce challenges, there are potential negative impacts emerging from the deployment of the technology. These may be deliberate, where AI is employed as a weapon by cyber assailants or other malefactors, or inadvertent, caused by well- intentioned users (e.g. by introducing unintended biases into underwriting decisions). Given the tremendous capability of most AI tools, the potential for harm is real, especially in industries like financial services or healthcare, where customer privacy and trust are critical to success. This accounts for the slower deployment of AI in areas such as the customer experience, where cyber threats, market manipulation, and data bias and privacy concerns pose significant challenges. As companies become more familiar with customer- facing AI use cases, however, they are also becoming more comfortable with managing these risks.14 There are various risks associated with using AI in financial services; one of the most significant is the spread of misinformation, leading to potential market manipulation and fraudulent transactions, which is an increasing concern across all industries. Figure 4 highlights that the risk of misinformation and disinformation is ranked first in the short term (up 15 positions from the previous year) and fifth in the longer term, based on a cross-industry perception survey of more than 1,500 experts who were asked about major global risk concerns two and 10 years from now.15 Global risks ranked by severity over the short and long terms (industry agnostic) FIGURE 4 Economic Environmental Geopolitical Societal Technological1 Misinformation 2 Extreme weather events 3 Societal polarization 4 Cyber insecurity 5 Interstate armed conﬂict 6 Lack of economic opportunity 7 Inﬂation 8 Involuntary migration 9 Economic downturn 10 Pollution1 Extreme weather events 2 Critical change to Earth systems 3 Biodiversity loss and ecosystem collapse 4 Natural resource shortages 5 Misinformation and disinformation 6 Adverse outcomes of AI technologies 7 Involuntary migration 8 Cyber insecurity 9 Societal polarization 10 Pollution2 years 10 years Source: World Economic Forum. (2024). These are the 3 biggest emerging risks the world is facing. https://www.weforum.org/agenda/2024/01/ai-disinformation- global-risks/. One of the most significant risks of using AI in financial services is misinformation, leading to potential market manipulation and fraudulent transactions. Artificial Intelligence in Financial Services 15

Artificial Intelligence in Financial Services 2025