When it comes to investing and planning your financial future, are you more willing to trust a person or a computer?
This is no longer a hypothetical question.
Major banks and investment firms use artificial intelligence (AI) to make financial predictions and provide advice to customers.
Morgan Stanley uses AI to mitigate the potential biases of its financial analysts when it comes to stock market predictions. And one of the largest investment banks in the world, Goldman Sachs (GS), recently announced that it will test its use AI to help write computer codealthough the bank declined to say in which division it was used. Other companies use AI to predict which stocks might rise or fall.
But do people actually trust these AI advisors with their money?
Us new research explores this question. We found that it really depends on who you are and your prior knowledge of AI and how it works.
Trust differences
To explore the issue of trust when it comes to using AI for investing, we asked 3,600 people in the United States to imagine they were getting advice about the stock market.
In these imagined scenarios, some people received advice from human experts. Others received advice from AI. And some got advice from people working with AI.
In general, people were less likely to follow advice if they knew AI was involved in creating it. They seemed to trust the human experts more.
But distrust of AI was not universal. Some groups of people were more open to AI advice than others.
For example, women were more likely to trust AI advice than men (by 7.5%). People who knew more about AI were more willing to listen to the advice (by 10.1%). And politics mattered: People who supported the Democratic Party were more open to AI advice than others (by 7.3%).
We also found that people were more likely to trust simpler AI methods.
When we told our research participants that the AI used something called ‘ordinary least squares” (a basic mathematical technique that uses a straight line to estimate the relationship between two variables), they were more confident than when we said it was using deep learning (a more complex AI method).
This may be because people tend to trust things they understand. Just as a person might trust a simple calculator more than a complex scientific instrument he has never seen before.
Trust the future of finance
As AI becomes more common in the financial world, companies will need to find ways to improve trust levels.
This may include educating people about how AI systems work, being clear about when and how AI is used, and finding the right balance between human experts and AI.
Additionally, we need to tailor the way AI advice is presented to different groups of people and demonstrate how well AI performs over time compared to human experts.
The future of finance could involve much more AI, but only if people learn to trust it. It’s a bit like learning to trust self-driving cars. The technology may be great, but if people don’t feel comfortable with it, it won’t catch on.
Our research shows that building this trust isn’t just about creating better AI. It’s about understanding how people think and feel about AI. It’s about bridging the gap between what AI can do and what people think it can do.
As we move forward, we will need to continue studying how people respond to AI in finance. We will have to find ways to make AI not just a powerful tool, but also a trusted advisor where people can feel comfortable making important financial decisions.
The financial world is changing rapidly and AI is a big part of that change. But at the end of the day, it’s still people who decide where to put their money. Understanding how to build trust between humans and AI will be critical to shaping the future of the financial industry.
Gertjan Verdickt is a lecturer at the business school of the University of Auckland, Waipapa Taumata Rau. This article is republished from The conversation under a Creative Commons license. Read the original article.
