#152 Is Artificial Intelligence A Risk for Credit Unions: What My Voice Sounds Like with AI

Credit Union Exam Solutions Presents With Flying Colors

Should Artificial Intelligence or AI Scare Credit Unions? This is With Flying Colors but this is NOT Mark Treichel. This is an AI recording of my voice that is saying what I type. It is an earlier version of my podcast software's AI tools which I have never used. I am not a fan but wanted you to hear how it sounds. I don't think someone could pretend to be me with this low quality of AI. But it will only get better.

In my opinion I feel like Winnee the Pooh's friend Eeyore the Donkey.

This

Is

Fun

I listened to another podcast about AI and it stated that the head of the CFPB was recently asked by congress what he could do about AI risks. While I do not always agree with the CFPB I loved his answer. He said the real question is what can congress do?

To add a bit more meat to the AI aspects of this podcast I asked ChatGPT a question which is below and the answer:

are there banking risks for artificial intelligence

ChatGPT

Yes, there are various banking risks associated with the use of artificial intelligence (AI). Some of these risks include:

Security Risks:

Data Security: AI systems in banking often require access to large amounts of sensitive customer data. If not properly secured, this data can be vulnerable to breaches, leading to financial losses and reputational damage.

Cybersecurity Threats: AI systems may be susceptible to cyber attacks, including hacking attempts or attempts to manipulate AI algorithms for fraudulent activities.

Operational Risks:

System Failures: AI systems can experience technical failures, leading to disruptions in banking operations. This could result in financial losses, customer dissatisfaction, and regulatory scrutiny.

Integration Challenges: Integrating AI technologies into existing banking systems may pose challenges, and inadequate integration can lead to operational inefficiencies.

Regulatory and Compliance Risks:

Compliance Issues: AI applications in banking must adhere to various regulatory standards. Failure to comply with these standards may result in legal and financial consequences.

Lack of Regulatory Clarity: The evolving nature of AI technology may lead to a lack of clear regulatory frameworks, making it challenging for banks to ensure compliance.

Ethical Risks:

Bias and Fairness: AI algorithms may inherit biases present in the training data, leading to discriminatory outcomes. This can result in unfair treatment of certain individuals or groups, raising ethical concerns.

Transparency: Lack of transparency in AI decision-making processes can be a concern. Understanding and explaining the rationale behind AI-driven decisions is crucial for building trust among customers and regulators.

Reputational Risks:

Public Perception: If customers perceive that AI is being used inappropriately or without proper safeguards, it can harm a bank's reputation. Negative public perception can lead to customer distrust and a loss of business.

Financial Risks:

Model Risk: The accuracy and reliability of AI models can impact financial decisions. If AI models are not well-calibrated or fail to adapt to changing market conditions, it can lead to financial losses.

Overreliance on AI: Excessive reliance on AI without appropriate human oversight can pose financial risks if AI systems make incorrect decisions or fail to adapt to unforeseen circumstances.

Banks and financial institutions need to carefully manage these risks through robust governance, compliance measures, ongoing monitoring, and regular audits of their AI systems. Collaboration with regulators and industry stakeholders is also essential to address the evolving challenges associated with AI in banking.

In closing and as a reminder this is NOT Mark Treichel. It is all AI. Thanks for listening to my monotone robotic AI version of me. This is NOT Mark Treichel, signing off With Flying Colors