Financial AI Vulnerabilities
Abstract
Artificial intelligence (AI) is reshaping the financial sector, driving efficiency and innovation. AI has the potential to improve efficiency, help with regulatory compliance, enable advanced data analytics and produce more personalised financial products. However, the FSB's 2024 AI report identified several vulnerabilities, including third-party dependencies, market correlations, cyber risks, and challenges in model risk and governance, which may have implications for financial stability. At the request of the South African G20 Presidency, this report examines how financial authorities can monitor AI adoption and assess related vulnerabilities. It builds on the FSB's 2024 report and incorporates findings from a member survey on AI monitoring approaches, interviews with member authorities, publicly available information and stakeholder outreach.