Businesses in Australia’s financial sector are eager to avoid the legal risks posed by fintech, a new report from Baker McKenzie has found.
“Our clients in Australia are telling us that they are keen to avoid any legal risk associated with non-compliance, in particular as they continue to grow and develop their fintech offerings and their use of AI-driven regtech solutions,” said Adrian Lawrence, head of Baker McKenzie’s TMT group in the Asia-Pacific region.
Lawrence said that it is alarming that the firm’s Ghosts in the Machine: Revisited report found that only 32% of respondents believe financial regulators have sufficient understanding of financial technologies and their impact on the current financial services sector.
“Furthermore, the report found that six in 10 say existing regulation isn’t sufficient to address the issues posed by AI,” he said.
A follow-up to the firm’s 2016 report, Ghosts in the Machine: Artificial intelligence, risks and regulation in financial markets, the new report gathered responses from 355 financial services leaders worldwide.
The study found that the sector is more confident now in the transformative powers of AI than in 2016, Baker McKenzie said. It found that 52% of respondents expect AI boosting efficiency, compared to 39% in 2016. The number of financial institution leaders who expect customer experience improvement has increased to 42% from 20%. Confidence in AI to improve risk management remained about the same, at 40% this year compared to 41% in 2016.
Baker McKenzie found that only a third (38%) of financial institutions are confident of their understanding of the legal risks of AI technologies that they are adopting. It also found that only 8% of respondents had policies in place for the ethics of AI technologies.