AI-based financial advice a tricky slope: Experts

AI’s rapid integration into financial services is outpacing legal and ethical frameworks, leaving consumers exposed to risks, according to Bengaluru-based experts. Financial institutions increasingly rely on AI for automation, but the absence of accountability measures—such as transparency in data handling and decision-making—creates vulnerabilities. Users often lack clarity on how algorithms influence advice, particularly when platforms process queries through multiple AI layers without explicit consent. Prof Madhu Veeraraghavan, pro vice-chancellor at Manipal Academy of Higher Education (MAHE), advises consumers to approach AI financial tools with caution. While AI can assist with information, critical decisions like savings, debt, or investments require human judgment and regulatory oversight. Remya Tressa Jacob, assistant professor at TAPMI, suggests watching for red flags like overly standardized AI responses and minimal human interaction, signaling potential transparency gaps. The lack of ethical guidelines complicates compliance, as deep learning models often operate as ‘black boxes,’ obscuring decision-making logic. Prof Tuhin S Banerjee, associate dean at RV University, highlights risks of data misuse and unauthorized profiling in hyper-personalized AI-driven services. Without governance, financial institutions and regulators struggle to ensure fairness or detect biases in automated advice. Experts stress the urgency of establishing clear policies to protect consumers and maintain trust in AI-enabled financial tools. Without intervention, the current landscape leaves users vulnerable to errors, misinformation, and unchecked algorithmic influence in sensitive financial matters.