AI in Finance: A Double-Edged Algorithm

LONDON — As artificial intelligence (AI) rapidly transforms accounting, banking, and financial services, business leaders are urging international common standards to prevent bias, privacy breaches, and out-of-control automation. Aaron Harris, Sage’s chief technology officer, warns that the “move fast and break things” culture of tech development can come back to bite in finance, where flawed AI tools can destabilise firms and increase inequalities.

A record 28% of VC in Q2 2024 was invested in AI startups, and by 2030, 90% of small and medium-sized enterprises are expected to employ AI for tasks like real-time anomaly detection. But Harris emphasises that ethics cannot lag behind adoption. “The Wild West era of AI has to be behind us. Without regulation, technologies like AI-based credit scoring or candidate screening could amplify bias or cripple struggling companies.”.

A Sage poll finds that 72% of finance directors will have AI-specific policies in place, and 71% will mandate ethics training for users. But gaps exist: Only 22% of AI professionals are female, and 25% are ethnic minorities, creating concerns about skewed development. “Jurassic Park’s warning is relevant here,” Harris said. “Just because AI can do it doesn’t mean it should.”.

The demand for “AI detectors” — programs to inspect algorithms for bias or tainted data — is increasing as companies use AI to account for work such as invoice automation and in banking to detect fraud. Harris stresses training models on tidy datasets and creating diverse development teams. “Transparency isn’t optional when AI makes financial decisions,” he stated. Global regulation is haphazard. The G7’s ethics code and the EU’s AI Act are welcome, but Harris is adamant that incremental bit-by-bit regulation will be inadequate for technology with no borders. He backed the Bletchley Declaration’s appeal for shared principles but demanded faster harmonisation: “Scattergun ethics will breed distrust. We need a ‘high watermark’ for AI — now.”

Open-source development and advisory boards could democratize development, Harris said, noting the accounting profession’s willingness to lead. Responsible AI demands policymakers, developers, and businesses rowing together.

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