Is AI a threat to your clients’ money?

Artificial intelligence (AI) is an industry that has skyrocketed in the last five years. Intelligent technologies of this kind are reported by Statista to be worth $200 billion in the US alone, as of 2023, and are projected to be worth $1.8 trillion by 2030.

You might have heard of popular AI tools like ChatGPT, a search tool that can produce lengthy answers – even essays – on an array of topics. This content is often highly convincing, sometimes looking as if it was written by a human being.

In the financial services sector, AI is making leaps and bounds too. From cashflow modelling software to automated reporting, most advice firms, accountants, and investment platforms use AI in some form. In fact, the Bank of England (BoE) reports that 75% of UK financial services firms are already using AI, with a further 10% set to start using it in the next three years. This is a huge increase on the figures from 2022, which suggested that 58% of firms used AI.

As with any piece of technology, AI can be a force for good in the right hands – but financial criminals are also benefiting from the rise of intelligent technology.

So: is AI a threat to your clients’ money? It’s slightly more complicated than that. Keep reading to explore the key factors you need to know about.

“AI” is a broad definition for several types of technology

When you think of AI, you might picture intelligent robots from an apocalypse movie taking over the world.

While there are some AI technologies that are developing human intelligence at a rapid pace, “AI” describes all sorts of technologies.

For instance, the spam filter used by your email platform is a form of AI. The computer learns which types of emails you don’t like, scans the communications coming in, and builds an algorithm that routes these types of email straight into spam.

This is on the other end of the spectrum from AI that can, for instance, enable a car to drive itself.

So, when you read about AI and its effects on the world of finance, remember to do some digging of your own and find out more about the specific technology you’re reading about. This can help to break down preconceptions and enable you to understand the functions, and potential harms, of certain types of AI.

The use of AI could help financial experts to improve client outcomes

As it stands, AI is a hugely helpful tool for both financial experts and everyday consumers.

For your average client, AI might help them:

• Build their credit score, using intelligent credit reporting on a mobile app
• Keep track of their investments day-to-day
• Be warned of potential scams through email, social media, or banking apps
• Track their financial behaviours using apps that map their habits and feed back the data in helpful charts and graphs.

For financial planners and other experts, AI helps with:

• Creating automated reports based on client data
• Scanning client information for anti-money-laundering purposes
• Reviewing and managing investment portfolios
• Scheduling a busy workload to ensure all clients are seen to in a timely manner.

With these positives in mind, it would be unfair to say that AI is a threat to your clients’ wealth on the whole.

This said, AI can’t provide the same service as a qualified professional. In fact, 38% of investors don’t want AI involved in the advice process at all, FTAdviser reports.

What’s more, there’s another side to the story. AI is being used to defraud consumers of their hard-earned money – this is something you and your clients need to be aware of.

AI is increasingly connected to fraud and scams, which could harm your clients

According to a report from NatWest Group, AI is contributing to the rise in financial scams. NatWest says 42% of British consumers have been targeted by scammers in the past 12 months.

“Deepfake” technology, which uses AI to clone or recreate websites, wording and imagery from trusted organisations, makes it hard for consumers to differentiate between scams and genuine communications. What’s more, advanced data analytic software allows AI to create highly personalised and convincing communications that consumers may fall for, the report says.

As a result of this, 59% of British consumers say it’s getting harder to identify AI-based scams, and two-thirds say they’re concerned about vulnerable family members falling victim to fraud.

Get in touch

While AI isn’t “all bad”, this technology could be used to defraud your clients. Putting them in touch with a qualified financial planner may help to reduce the chances of this happening and could encourage your clients to take on professional guidance rather than turning to DIY solutions.

Email enquiries@prosserknowles.co.uk or call 01905 619 100 to learn more.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.