In 2024, the Australian Finance Industry Association (AFIA) engaged KWM and Sapere to analyse the impact that AI is having, and that we expect AI to have, on the Australian finance industry. The research involved a diverse group of industry participants.
Our report highlights the transformative potential of Generative AI (GenAI) in the industry, where adoption could lead to substantial productivity gains over the next decade. Under one scenario, it is projected that the value of this productivity gain for the Australian finance industry in the period from 2025-2035 will be $15.9b, with a flow on contribution of an additional $48.9b to Australia’s GDP by 2035. This is a significant economic boost driven by the industry's embrace of this innovative technology.
Nevertheless, the integration of GenAI comes with its own set of challenges and risks, including 8 key concerns related to:
The Commonwealth Government believes that current laws are insufficient to tackle the potential harms associated with GenAI and is contemplating the introduction of cross-sector regulations for high-risk AI applications.
There is no international consensus on how to regulate the risks of AI. The EU’s AI Act represents a significant regulatory benchmark. In contrast, both the Trump administration in the United States and the government of the United Kingdom have favoured a more innovation-friendly approach. Given the considerable productivity and economic advantages that GenAI could offer Australia, it is crucial for the government to avoid unnecessary regulation, to provide regulatory certainty and to focus on truly high risk applications of GenAI where there are gaps in existing regulation.
The Australian Productivity Commission has flagged the increasing pressure on international governments to respond quickly and comprehensively to the need for AI regulation but noted:
knee-jerk approaches to regulating AI threaten to stifle uptake and squander potential benefits. While there are clearly risks from AI adoption, government should take a considered approach to regulation that also keeps the benefits of AI in view.
To gain deeper insights into how Generative AI can transform the finance industry and the steps we can take to mitigate its associated risks, we invite you to read the full report. Don’t miss this opportunity to be part of the conversation shaping the future of finance in Australia!
One particular interesting finding in the report is that, despite the challenges, the pace of Gen AI adoption in sectors such as consumer and retail and health that currently have low adoption, are projected to have substantial increase over the next three years.
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