Denis Beau, the First Deputy Governor of the Banque de France noted recently the use of Artificial intelligence (AI) is on the rise and that the possibilities offered by this set of technologies seem “immense.”
Beau added in a blog post from the Banque de France that AI has underpinned such progress that this year the Nobel Prize in Physics was awarded to two “pioneers of artificial neural networks, while the Nobel Prize in Chemistry recognized an application of AI to understand the structure of proteins.”
In the financial sector, Beau pointed out that AI is increasingly used, for example to assess “credit risk, set insurance rates, or estimate asset volatility.”
The blog post from Banque de France also stated that this technology is now the main “driver of the digital transformation of the financial sector.”
And this transformation obviously cannot “leave the central banker and financial supervisor that I am unmoved,” Beau said in his speech.
Beau pointed out that it raises the question of the “opportunities and risks of these changes for the financial sector. And it also raises questions for central banks and financial supervisors about their own operations and their mastery of these new technologies: how will we monitor the use of AI by financial players in the future, and what are the possibilities offered by these technologies for our own activities?”
Beau further noted that AI, coupled with data science, is a powerful force driving the “transformation of the financial sector.”
Beau added that their observations show that AI is increasingly “used by financial institutions, in all segments of the value chain. Banks use these tools to improve the “user experience”, but also to automate and optimize a number of internal processes. ”
Beau also stated that AI is also used to monitor and control risks, as demonstrated by its success in “use cases relating to the fight against fraud or money laundering and the financing of terrorism (AML/CFT).”
The blog post from Banque de France further stated that the advent of generative AI over the past two years has “been a powerful force accelerating already underway trends.”
Indeed, Beau said that it has led to a revolution in the “accessibility of AI technologies: the ability to interact in natural language with algorithms – via large language models or LLMs – has made the adoption of new technologies much easier. It is also accelerating innovation momentum within companies, as code writing is no longer confined to IT staff.”
Beau also shared that AI could thus have a “powerful impact on productivity: in France, the AI Commission, chaired by Anne Bouverot and Philippe Aghion, estimated at around 1% per year the additional growth that AI deployment could generate in our country over the next ten years.”
This technological revolution allows many use cases to develop, Beau noted.
For instance, Beau explained that generative AI-powered chatbots have the ability to provide a personalized “response that is more tailored to the user’s situation. In insurance, satellite image processing can in some cases be used to directly assess the damage caused to a building, and then automatically manage customer compensation. And this is just the beginning: we are probably far from having explored all the possibilities these technologies can provide.”
Beau also explained that well-controlled AI can therefore “increase the efficiency of financial institutions and contribute to enhance their revenues, thereby weighting positively on their profitability – which is a central element of their soundness – including by providing them with risk control solutions.”
