Secure and Ethical Deployment of AI in Digital Payments: A Framework for the Future of Fintech

Abstract

Advances in Artificial Intelligence (AI) and Machine Learning (ML) are expected to create a new wave of inefficiencies in economic activities, leading to massive productivity gains and reduction of costs. In central banking, AI and ML can help with central bank objectives, such as maintaining price and financial stability, monitoring the business cycles, and serving as a basis for issuing Digital Currencies, for further adoption by users and businesses. At the same time, the massive adoption and deployment of AI technologies and products come with ethical and security risks, such as algorithmic biases and exploitation of VUCA situations with cyberattacks and prompt attacks for leading AI/ML Models, thus undermining Security and Safety, and reinforcing trust, key requirements for the modern Digital Payments platform Central Banks, Retail Banks, and other Payment Institutions are expected to build and scale.

How may Central Banks help secure and ethically deploy, by both the private sector and themselves, AI technologies applied to payments, particularly Digital Currencies? We identify priorities and the right regulatory guidelines and sandboxes, to ethically and securely develop financial services using these technologies. Our conclusions are based on a literature review and survey results with practitioners, in Central Banks and the Private Sector, working on or in charge of implementing these regulations to support the Central Bank Digital Currency in payment systems. We specifically address the following main questions. How are Central Banks currently supporting the Security and Trust of Digital Payments? What role may Central Banks play in creating the incentives for the Private Sector to ethically and securely leverage AI/ML technologies to build intelligent financial services in Digital Payments, while not crowding them out? At the Multi-Lateral Level, how to combine these efforts for interoperability and to better address Cybersecurity risks?