Generative Artificial Intelligence in Finance

15Ethics and Laws: Governing Generative AI’s Role in Financial Systems

Prakriti Dixit Porwal

Department of Management Studies, Geetanjali Institute of Technical Studies, Udaipur, Rajasthan, India

“AI is probably the most important thing humanity has ever worked on”

– Sundar Pichai- CEO of Google and Alphabet

Abstract

Since generative artificial intelligence (AI) has evolved into more prevalent in financial systems, ethical and compliance concerns have emerged as vital parameters in its implementation. The present chapter discusses the complex relationship between generative AI tools with the financial arena, with a particular emphasis on the need for ethical principles and legal structures. The study highlights the potential effects of AI-generated outputs such as false dissemination, market forecasting, and algorithmic trading strategies, all of which have direct implications for financial stability, consumer protection, and data privacy.

Furthermore, the chapter underscores the complex challenges connected with inbuilt preconceptions, accountability opacity, transparency inadequacies, and unanticipated consequences that have emerged in real-world circumstances. To address these issues, a comprehensive framework is provided, one that smoothly integrates ethical foundations with regulatory processes to promote the secure and lawful integration of generative AI inside the banking domain.

The system demands continuous surveillance, periodic audits, and synergy among AI programmers, ...