CFA Society Netherlands: Critical thinking more important than ever with the rise of AI
This article was originally written in Dutch. This is an English translation.
With the rapid development of artificial intelligence (AI), there is a lot of attention for its proper adoption. Its power lies in the combination of man and machine. The CFA Institute Research & Policy Centre makes practical recommendations.
By Alwin Oerlemans, Head of Product Management at APG Asset Management and Chair of the Advocacy Committee of CFA Society Netherlands
A recent MIT study, reported on by TIME Magazine in June, shows that ChatGPT users exhibit less brain activity when writing an essay. This indicates reduced critical thinking skills. The work presented was less original, and dependence on ChatGPT increased during the experiment. Due to the risks associated with the rapid rise of AI in education, researchers at MIT's Media Lab felt it was desirable to seek publicity, despite the limited scope and preliminary nature of the findings.
AI expert Noelle Russell emphasises how AI can be used to augment – not replace – human thinking, especially in sectors where context and relationships are crucial, such as the financial sector.
The financial sector is a clear example of how AI is changing traditional processes. The CFA Institute Research & Policy Centre recently shared five practical lessons for investment professionals.
The first lesson is that AI is particularly valuable in enhancing professional human capabilities, rather than replacing them. New employees in particular benefit from this, which increases productivity.
A second lesson concerns the possibilities for integration into strategic decision-making processes. AI can assist in identifying risks and counteracting groupthink. However, the opacity of AI outcomes can raise questions, including with regard to regulation.
A third lesson concerns the concern that AI can undermine critical thinking, which we also saw in the MIT study. Continuing to perform tasks without using AI offers a counterbalance here.
The fourth lesson concerns ensuring guidance and supervision of the application of AI in decision-making processes in order to manage ethical and supervisory risks.
The fifth lesson is that the knowledge and skills of employees in the sector must develop in line with the rise of AI. Specifically, this refers to the ability to learn how to learn. Providing value to customers will depend on the ability to balance human judgement with the use of AI.
The rise of AI has the full attention of policymakers and regulators. Given the strategic importance of AI, they have a wealth of public information available on the development and implementation of AI worldwide. A recent study by the CGAP think tank shows that the definitions of AI used vary, but frequently mentioned core elements include performing human tasks in the areas of reasoning, learning and decision-making, and the ability to collect and interpret large amounts of data. Their research also shows differences between soft and hard regulation, i.e. between non-binding agreements and specific legislation. Given its context-specific nature, there is no generic optimal supervisory model for AI. Recommendations for the financial sector also vary by jurisdiction.
The Bank for International Settlements (BIS) sees the benefits of productivity gains and cost savings for the financial sector. It sees AI as primarily amplifying existing risks. However, the BIS does point to the need for adequate supervision due to new market players and business models, and for supervision of large players in cloud and AI services due to the concentration in the sector. In short, critical thinking remains the order of the day.