Governments, financial regulators and businesses should gear up to address the challenges of developing and deploying trustworthy artificial intelligence in the financial sector, the Organisation for Economic Cooperation and Development (OECD) said in its “Business and Finance Outlook 2021″ report. According to the report, though AI, which is a set of applications including machine learning and robotics, holds “tremendous potential to improve productivity and innovation” in the financial sector, its extensive adoption in the industry requires the right infrastructure that includes access to sufficient computational capacity and economical high-speed internet services. “AI can create new risks or reinforce existing risks,” the report said. “The myriad uses of AI call for balanced policy approaches that can support AI development and adoption while mitigating risks.” Some of the risks associated with AI include “entrenching bias, lack of explainability of financial decisions, introducing new forms of cyber attacks and automating jobs ahead of society adjusting to the changes”. It also raises challenges related to “privacy, autonomy, transparency and accountability”, which are particularly complex in the financial sector, said the report. It added that complex AI algorithms that are difficult or even impossible to explain could “amplify existing risks in financial markets or give rise to new risks”. Over the past few years, AI adoption in finance has grown substantially, enabled by the abundance of available data and the increase in the lower cost of computing capacity. The financial and insurance sector is among the top 10 industries in terms of the amount of venture capital investments in AI start-ups, investing over $4 billion globally last year, OECD data showed. Almost 65 per cent of the VC investments in the sector went to American AI start-ups. “As AI applications become increasingly integrated into business and finance, the use of trustworthy AI will become increasingly important for ensuring trustworthy financial markets,” the OECD report said. Trusted and explainable AI is also crucial to widespread adoption of the technology and the success of businesses. “Existing financial regulations may fall short of addressing systemic risks presented by wide-scale adoption of AI-based FinTech by financial firms,” OECD said. “AI uptake in a highly regulated sector such as finance could benefit from a policy environment that is flexible enough to keep up with technological and business model developments and promote innovation, yet remains safe and provides legal certainty,” it added.