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Navigating the legal challenges of utilizing ChatGPT in banking industry
As disclosed on the first page of the ChatGPT display, it may occasionally generate incorrect information, and produce harmful instructions or biased content.
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In this stock photo, the ChatGPT chatbot screen is seen on smartphone and laptop display with the Chat GPT login screen in the background. (Shutterstock/Ascannio)
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he application of artificial intelligence (AI) and machine-learning technologies has emerged as a hot topic in discussions on the digital transformation and innovation in the financial services industry. ChatGPT is the latest technology application that is currently gaining traction.
Developed by OpenAI, ChatGPT is a language model that generates human-like responses to questions on a variety of topics. One of its uses in the financial services industry is as a chatbot for banks. Chatbots are computer programs that can simulate human conversation for a variety of applications. Customers can use chatbots to get information like account balances, credit card usage, interest rates and exchange rates. ChatGPT can enhance chatbot capabilities by leveraging natural language-processing technology to provide customers with high-quality, fast and friendly responses.
In theory, using chatbots to manage routine customer inquiries can improve a bank’s operational efficiency. It can also boost customer satisfaction by consistently providing instant services 24 hours a day, seven days a week. Customers can benefit from a more convenient banking experience, while banks can optimize resource allocation.
Nonetheless, there are social and ethical concerns arising from chatbots' inability to understand customers’ emotions due to a lack of human empathy. Furthermore, when banks explore the feasibility of adopting this technology there are also legal challenges that must be observed by all stakeholders, including customers and relevant authorities.
One of the challenges is ChatGPT's legal presence in Indonesia as user-generated content, a private Electronic System Provider (ESP). According to Communications and Information Minister Regulation No. 5/2020, private ESPs that allow users to provide, display, upload or exchange information and electronic documents fall under this category. Further, private ESPs that have a portal, website or application used for sending digital content for payment must comply with registration requirements in accordance with the prevailing regulations.
Given the significance of compliance risks for banking institutions, banks must ensure their adherence to all applicable laws. When banks use third-party services, they must also pay attention to the third party's compliance with prevailing regulations.
Another challenge is related to technology limitations. As disclosed on the first page of the ChatGPT display, it may occasionally generate incorrect information, and produce harmful instructions or biased content. Using technology with such limitations can undoubtedly expose banks to significant risks. If a bank's chatbot provides incorrect or misleading information, not only will customers suffer, but so will the bank's reputation.
