Nearly three million people in the UK use artificial intelligence (AI) tools when making financial decisions, and there is a worrying rise in the number of people using them to trade on the stock market.
AI is becoming a part of everyday life for many people, but as we get used to helping manage our finances, we are pushing the boundaries of how the technology can be applied and taking serious financial risks.
According to a survey of 2,000 people by Broker Chooser, which matches traders with brokers, around 22% of people rely on AI for stock market predictions.
The survey also found that about a third of those questioned already use AI for financial advice, with 54% of Millennials and 47% of Gen Z using it. In total, approximately 60% of those surveyed are already using AI or are considering using AI in the future.
The results showed that almost 53% of those surveyed would act on guidance generated by an AI tool, and 17% of Millennials would choose an AI over a human advisor.
According to the survey, AI is still primarily used for low-risk financial tasks, with 43% using it to find better savings rates and 33% for budgeting (38%) and planning financial goals.
While AI has been widely deployed across the banking industry to automate services and give people tools to understand products, its use in stock trading by consumers is “risky,” according to one banking expert who requested anonymity.
“I don’t understand how they make decisions because it’s just pattern recognition,” he said. “We make assumptions based on the available data.”
Adam Nasri, head broker analyst at BrokerChooser, said: “Although AI tools are extremely useful for everyday financial tasks such as budgeting and comparing savings accounts, relying on them to make stock picks and market predictions comes with significant risks, especially in fast-moving markets such as foreign exchange.
“While these (AI) algorithms provide general guidance based on historical data and patterns, they cannot fully account for real-time market volatility, geopolitical events, personal financial situations, risk tolerance, and long-term goals.
“AI is increasingly being used in financial advice because it provides instant and easily accessible answers to almost any question. This is particularly appealing to younger generations, who often prioritize speed. And for many, AI removes the anxiety of discussing personal finances, creating a judgment-free space.”
But he cautioned that “when real money is at stake, AI should always be used to inform rather than make decisions, and consumers should always rely on trusted, regulated sources for financial guidance.”
This comes after British Prime Minister Keir Starmer announced that the government would take on the fight against AI bots. The government said it would “close legal loopholes and force all AI chatbot providers to comply with illegal content obligations under the Online Safety Act or face the consequences of breaking the law.”
“We are not going to wait for families to take the steps they need, which is why we are strengthening our rules around AI chatbots and laying the groundwork to act quickly on the outcome of our consultation on young people and social media,” said technology secretary Liz Kendall.
